1 NBCC share price target reports by brokerages below. See what is analyst's view on NBCC share price forecast, rating, estimates, valuation and prediction behind the target. You may use these research report forecasts for long-term to medium term for your investment or trades in 2020.
NBCC has a strong order book of Rs 720 bn on standalone which is to be executed over the next five years. But, it is facing approval/litigation related issues in ~Rs 350 bn of project largely from redevelopment side. The company expects Q4FY20 and FY21 to be strong based on pickup in execution in NCR after removal of construction ban in NCR, strong order backlog, contribution from new projects, clearance of stuck projects and contribution from real estate sales. We have cut our EPS estimates for FY20E and FY21E by 22% and 7% to Rs 1.3 and Rs 2, respectively, based on weak execution in 9MFY20 and factoring in risk related to approvals in large projects. We also introduce EPS estimates for FY22 at Rs 2.6. We maintain ADD rating on the stock with revised target price of Rs 36 (Vs Rs 42 earlier), valuing the stock at a forward PE multiple of 15x on Dec 21E, as we roll forward our estimates.
Over the last two years, indiscriminate delays in key redevelopment projects and likely foray into asset development business have been the major drags for the stock. While it is still difficult to ascertain about likely revenue booking from redevelopment projects, we believe sizeable opportunity in PMC business is sufficient enough to witness healthy traction, going ahead. Further, unlike other infrastructure companies, strong balance sheet, decent return ratios and sustained cash flow generation augur well for the Company. We trim down our revenue estimates by 16%/17% for FY20E/FY21E mainly to factor in prolonged delay in key redevelopment orders. However, we broadly maintain our earnings estimates for FY20E/ FY21E post factoring in lower corporate tax rate. Current valuations at 17.7x/14x for FY20E/ FY21E earnings appear to be attractive. The stock is currently trading at par valuations of the industry as against premium valuations it commanded over the years. We reiterate our BUY recommendation on the stock with an unrevised SOTP-based Target Price of Rs45.
Burgeoning opportunities in building construction are leading to significant order book build up for NBCC. However, margin volatility, stoppage of work at Delhi redevelopment projects and lacklustre pace of real estate monetisation remain key overhangs on the stock. Owing to lack of clarity on revenue and margin trajectory, we have trimmed FY20/21E EPS 19%/14% and PE from 16x to 12x, thus arriving at revised TP of INR32. We maintain ‘REDUCE’, while rolling forward the valuation to December 2020E.
The company has not given any revenue growth guidance for FY20E (Vs earlier guidance of 25-30% yoy growth). The company expects improvement in performance in the next 2-3 quarters based on approvals expected in key redevelopment projects with an improvement in margins. We have cut our earnings estimates for FY20E and FY21E by 29-32%, factoring in execution delays and certain cancellation of orders. After sharp correction in the stock, we upgrade our rating on NBCC to ADD (vs Reduce earlier) with revised target price of Rs 38, valuing at 18x FY21 EPS, factoring in medium term risk related to execution.
Outlook & Valuation: We continue to view NBCC as a robust growth story owing to its PWO status and niche presence in redevelopment of government’s old colonies. Further, a debt-free balance-sheet and superior return ratios augur well for the Company. Therefore, we continue to believe that NBCC should trade at premium to its peers. At CMP, the stock trades at 24.8x of FY20 and 19.9x of FY21 EPS, which appears to be reasonable. We do not envisage any re-rating of the stock due to slower redevelopment projects, ambiguity over Jaypee Infra deal and possibility of government pressure to acquire more sick companies in future. We maintain our HOLD recommendation on the stock with a revised SOTP-based Target Price of Rs64 (20x of EPS FY21E).
Valuation & outlook: The company targets revenue growth of 25-30% yoy growth in standalone basis with standalone EBITDA margins expected at 5-5.5% in FY20E. We have marginally revised our earnings estimates upwards for FY20E and FY21E. We maintain our Reduce rating on the stock with revised target price of Rs 61 (Vs Rs 60 earlier), valuing the stock at 19x FY21E EPS. We have factored in the near term risk related to project clearance, any risk on balance sheet due to shift towards asset heavy model, etc.
Valuation & outlook: The company targets over 30% yoy growth in the longer run. We have maintained our earnings estimates for FY19E and FY20E and introduce estimates for FY21E. We downgrade our rating on the stock to Reduce (Vs Add earlier) with revised target price of Rs 60 (Vs Rs 53 earlier) valuing the stock at 19x FY21E EPS. We have factored in the near term risk related to project clearance and any possible diversification towards asset heavy model and change in management.
We continue to view NBCC as a robust growth story owing to its PWO status and niche presence in redevelopment of government’s old colonies. Further, a debt-free balance-sheet and superior return ratios augur well for the Company. Therefore, we continue to believe that NBCC should trade at premium to its peers. However, considering the visible de-rating of the industry’s target multiple, we expect NBCC’s premium valuation multiple to de-rate in tandem. Tweaking our target multiple to 20x (from 30x earlier), we maintain our BUY recommendation on the stock with a revised SOTP Target Price of Rs62 (20x EPS FY21E).
With NBCC getting clearance for two major Delhi redevelopment projects (combined order value: Rs 18,000-20,000 crore), we expect a significant ramp-up in execution in FY20E. While we like NBCC given its unique business model and huge opportunities ahead, we highlight that the company’s aspiration for acquisition of Jaypee Infratech’s assets could be a key risk to its existing business model and could stress its balance sheet. We would be closely tracking developments on this front. Overall, we introduce our FY21E estimates and expect PAT growth at 18.6% CAGR to 556.4 crore in FY18-21E. We continue to maintain our BUY rating on the stock with a target price of Rs 56/share (18x FY21E EPS).
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
DISCLAIMER: Information is provided "as is" and solely for informational purposes, not for trading purposes or advice, and may be delayed. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and FrontPage will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein.