NBCC (India) LTD - Q2 FY18

NBCC LTD reported mixed results for the second quarter FY18 with decline in revenues whereas PAT and EBDITA were strong & stable on the back of controlled operating expenditure. Revenue stood at Rs. 13280 Mn for current quarter against Rs. 15351 Mn declining 13% YOY. EBDITA for Q2 FY18 was reported at Rs. 1212 Mn compared to Rs. 1117 Mn same period previous year growing 8% YOY. Sequential growth was in double digits, 23% in the current September quarter. PAT jumped to Rs. 812 Mn in the current quarter against Rs. 619 Mn corresponding period previous year growing 31% YOY. Sequential growth was at 24% in Q2 FY18. Other Income exhibited de-growth of 6% YOY in Q2 FY18 and stood at Rs. 354 Mn against Rs. 375 Mn same period previous year. Operating expenditure was at Rs. 12423 Mn in the current quarter against Rs. 14609 Mn same period previous year falling 15% YOY & 16% sequentially. EBDITA & Net Profit Margin were reported at 9.12% & 6.12% respectively in the current September quarter. EBDITA margin expanded 185 basis points whereas Net Profit Margin expanded 209 basis points YOY. One basis point is 1/100^th of a percentage. Higher Margins were attained on the back of lower operating cost, depreciation and finance expense in the current second quarter FY18. Finance costs stood at Rs. 70 Mn declining 3% YOY. 

NBCC, a Government of India, Navratna Enterprise with market cap of Rs.245070 Mn has three main segments, Project Management Consultancy (PMC), Real Estate & EPC. About 88% of its revenues have come from PMC segment, followed by EPC contributing 11% and Real Estate constituting just 1% in the current September quarter. PMC segment stood at Rs. 11662 Mn declining 13% YOY. Real Estate & EPC reported Rs. 146 Mn and Rs. 1384 Mn respectively in the current September quarter. The company started its overseas operations in 1977 and has wide global presence in countries such as Turkey, Nepal, Maldives, Mauritius, Oman to name a few. With Central Government’s renewed focus on infrastructure, NBCC will be one of the key beneficiaries in the long run. We recommend BUY for the stock for medium & long term with target of Rs. 385.

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