In Q1 June 2020 NBCC (India) reported an 80% decline in consolidated net profit to Rs 10.28 crore, in the year-ago period company’s net profit stood at Rs 51.46 crore. In total income, it reported a 62.39% plunge to Rs 730.15 crore from Rs 1,941.07 crore in the corresponding period of the previous year.
The outbreak of COVID – 19 pandemic and the consequent lockdown has affected daily business operations during the quarter ended 30 June 2020 due to insufficient availability of workforce and disrupted supply chain, said NBCC (India). The firm has resumed its construction related services in a phased manner. NBCC (India) said The results for the quarter are therefore not good enough to compare with those for the previous quarter.
The company announced the result after market hours yesterday, 14 September 2020. Shares of NBCC (India) rose 4.41% to settle at Rs 27.25 yesterday.
About NBCC (India)
Founded in 1960 as a Govt. of India Civil Engineering Enterprise, NBCC with its Headquarter in Delhi, today, holds the status of Navratna CPSE and has emerged as the undisputed leader in the Construction Sector on the back of its capabilities, innovative approach, adherence to the highest standard of quality, timely delivery and a dedicated workforce.
NBCC’s areas of operation encompass three (03) Primary Segments namely:
Project Management Consultancy (PMC): Executing landmark projects in diversified sectors as also Redevelopment Projects for Government.
Engineering Procurement & Construction (EPC): Working in a niche market and constructing Chimneys, Cooling Towers for Power Sector.
Real Estate Development: Developing Residential and Commercial inventories for Governments and the Public at large
With huge Market Capitalisation, NBCC is listed with both the Indian Stock Exchange namely, National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).
Of late, NBCC entered a new business vertical named Re-Development of Government Properties, under its PMC Segment. The maiden project in this vertical called Re-development of Delhi’s New Motibagh GPRA Complex successfully completed by the Company, earned it great appreciation, opening up new opportunities for the company in this vertical one after the other, eventually making this vertical, the prime focus area in its operation.
Financial performance affected on the account of weaker execution
Q1FY21 total income declined by 62.39% YoY to Rs 730.15 crore on account of weak execution in PMC (-33% YoY) segment due to delay in project clearances/litigation issues, fall in real estate revenue (45% YoY) and COVID led disruptions. As far Delhi redevelopment projects are concerned, the company has received clearances for the Nauroji Nagar project which got delayed for many years. While NBCC awaiting forest clearances for Netaji Nagar and Sarojini Nagar which is expected to receive in the coming months. Real estate projects are likely to be delayed on account of weak demand and slow down in the sector. The management expected to start pick up in execution from H2FY21 onwards and has guided an ambitious revenue target of Rs6,500cr in FY21E, including Rs1,000cr revenue from redevelopment projects. But we remain cautious due to concerns on real estate & redevelopment projects and reduce FY21E/FY22E revenue estimate by 36%/28% respectively
The company’s order book is strong, execution to play a key role
The order book remains strong at Rs70,000cr, however orders worth ~Rs13,000cr only were in the execution stage, expects to award Rs33,000cr projects in FY21.
NBCC got clearance for Nauroji Nagar projects while Netaji Nagar & Sarojini Nagar projects are awaiting forest clearances.
We cut FY21E/22E revenue estimates by 36%/28% due to delay in redevelopment projects & slow pace in real estate business.
We value NBCC‘s core business at a P/E of 10x on FY22E EPS & Rs5/share for land parcel held and maintain with the SOTP target price of Rs32.