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Multi Baggers

PN Vijay

Portfolio Manager

5.30 AM Jan 1st 1970

NBCC (India)

BSE ID : 534309     NSE ID : NBCC

RECOMMENDED PRICE 396.25

PEAK FROM RECO 145.88 -63.18%

CURRENT PRICE 109.45 Resource id #18

NBCC is an infrastructure and construction company. It is a totally debt free company with cash balance of over Rs 15000 million. We recommend to buy at CMP with a target price of Rs 650.

National Buildings Construction Corporation Ltd (NBCC)

Company Overview:

Headquartered in New Delhi, National Buildings Construction Corporation Ltd. (NBCC) was incorporated in 1960 as a Government of India venture, went public in 2012 and now it holds Navratna status. It is an infrastructure and construction company, engaged in project management consultancy (PMC), real estate development and EPC contracting. It has executed a wide array of projects ranging from roads, hospitals, offices, to residential and commercial projects and currently it is working on many projects from central and state ministries.

Financial Analysis:

Healthy Growth: The revenue grew by 12.24% YoY and 45.9% QoQ to Rs.14452.4mn in Q4FY14 while EBITDA went up by 5.47% YoY and 126.6% sequentially to Rs. 1033.4mn.

Margins: EBITDA margin was 7.05% as against 7.59% in Q4FY14 and 4.59% in Q3FY14.

Net Profit: The net profit in Q4FY14 went up by 11.42% YoY and 91.42% QoQ to Rs. 1069.3mn which included other income of Rs. 357.6mm.

Tax rate: Effective tax rate for Q4FY14 stood at 10.73% as compared to 28.1% in Q4FY13 and 30.6% in Q3FY14.

Positives:

Strong balance sheet: NBCC is a totally debt free company with cash balance of over Rs 15000 million. This is very unusual for a Real Estate development and construction company. Most others are saddled with debt.

Order book: The order book of the company stood at Rs. 130bn as on March 2013.

Business expansion on international level: NBCC is looking for overseas opportunities in countries like Oman, Botswana and neighboring countries and is also opening office branches in Botswana and Oman. It also has business tie up with a company in Oman for development of an infrastructure project.

Risks:

Any continued slow down in the economy is bound to have an implication on the projects of the company.

Valuations:

NBCC closed FY 14 with an EPS of Rs 21 out of which nearly Rs 9 came in the last quarter. For the coming year we estimate the EPS to be of the order of Rs 30 to 32. Hence the share is trading at a PE of 20 on past earnings and PE of 13 to 14 on current earnings. This is an attractive play. The share has run up considerably in the last 6 months and can be bought in a correction.

Disclaimer: The stock does not find a place in personal portfolios. Investors are requested to take the advice of a qualified Investment Advisor before making any investment.

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