ICICI Securities Places A Buy On This Construction Stock, Sees 30% Upside

Brokerage firm, ICICI Securities has placed a buy on the stock of NCC with a target price of Rs 170, suggesting an upside of 30% from current levels.

Strong order book position

According to ICICI Securities, NCC has a strong order book of Rs 50,244 crore (3.8x order book to TTM bill ratio), largely aided by Rs 25,895 crore worth of orders secured in FY23. "Furthermore, the company also received orders worth Rs 7587 crore in Q1FY24. Going ahead, the company believes similar (Rs 26,000) crore of order inflows during FY24, is a possibility with its strong emphasis on a) buildings: affordable housing, b) water: higher traction being witnessed in Jal Jeevan mission, c) electricals (RTSS scheme) and d) tunnelling," the brokerage has said.

Buy the stock of NCC with a target price of Rs 170

According to ICICI Securities, NCC is a key beneficiary of the tailwinds in the buildings, roads, water, mining and electrical segments. "Given the strong order book visibility, and improving balance sheet strength, it is poised for a strong growth ahead. We maintain our BUY rating with a target price of Rs 170," the brokerage has said.

NCC may see further debt reduction

According to ICICI Securities, standalone gross debt stood at Rs 980 crore, as of FY23 end vs. Rs 1184 crore in FY22. "Going forward, the company expects its gross debt to reduce by 100-200 crore in FY24, partly aided by higher profitability and improved collections. Furthermore, receipt of money from Sembcorp and NCC Urban monetisation receipt, if fructified, could result in further inflows of Rs 500-700 crore and debt reduction," the brokerage has said.

Disclaimer

The stocks have been picked from the brokerage report of ICICI Securities. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.