NCC Ltd Share Price – NSE  / BSE

Construction, Small Cap

The key equity indices continued to trade with minor losses in mid-morning trade. The Nifty traded below the 25,800 level after hitting day’s high of 25,907.60 in early trade. Metal shares declined after advancing for the seventh consecutive trading sessions.

At 11:30 IST, the barometer index, the S&P BSE Sensex, declined 129.62 points or 0.15% to 84,170.16. The Nifty 50 index fell 50.45 or 0.20% to 25,760.40.

In the broader market, the S&P BSE Mid-Cap index shed 0.09% and the S&P BSE Small-Cap index rose 0.44%.

The market breadth was strong. On the BSE, 2,215 shares rose and 1,518 shares fell. A total of 150 shares were unchanged.

The domestic market will be closed on Wednesday, October 2, 2024, in observance of Mahatma Gandhi Jayanti.

Economy:

India's fiscal deficit remained under control during April-August, reaching 27% of the full-year target. This containment was attributed to muted spending in the early months of the fiscal year. The government's spending has been lower due to general elections. In comparison, the deficit stood at a higher 36% during the same period in FY24.

The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) fell from 57.5 in August to 56.5 in September, highlighting a robust improvement in the health of the sector that was nonetheless the weakest since January.

As a result of rising purchasing prices, as well as greater labour costs and favourable demand conditions, Indian manufacturers lifted their charges in September.

The combination of job creation and slower increases in new business meant that companies were able to stay on top of their workloads.

Buzzing Index :

The Nifty Metal index fell 0.81% to 10,116. The index advanced 9.31% in the seven trading sessions.

Welspun Corp (down 2.05%), Steel Authority of India (down 1.87%), NMDC (down 1.69%), Hindustan Zinc (down 1.61%), Hindustan Copper (down 1.53%), Tata Steel (down 1.45%), Jindal Steel & Power (down 1.15%), Jindal Stainless (down 1.06%), JSW Steel (down 0.8%) and Adani Enterprises (down 0.48%) edged lower.

On the other hand, National Aluminium Company (up 2.36%), Ratnamani Metals & Tubes (up 0.06%) edged higher.

Stocks in Spotlight :

NCC added 1.72% after the company announced that it has received orders valuing Rs 2,327 crore in the month of September 2024. Out of these, orders worth Rs 1,417 crore relates to transportation division, Rs 520 crore relates to electrical division and Rs 390 crore relates to building division.

Sun Pharmaceutical Industries fell 0.86%. The company said that it has entered into a global exclusive commercialization, license, and supply agreement with Philogen for commercializing the latter’s specialty product Fibromun. Philogen is an Italian-Swiss company active in the biotechnology sector, specialized in the research and development of pharmaceutical products for the treatment of highly lethal diseases.

Bajaj Auto declined 1.89%. The company reported 19.60% jump in total auto sales to 4,69,531 units in September 2024 as against 3,92,558 units in September 2023. While the company’s domestic sales increased 23.18% to 3,11,887 units, exports rose by 13.11% to 1,57,644 units in September 2024 over September 2023.

Global Markets:

Asian stocks traded mixed after Federal Reserve Chair Jerome Powell indicated the recent outsized cuts enacted by the U.S. central bank should not be interpreted as a sign that future moves will be as aggressive. The U.S. dollar strengthened in response. Meanwhile, heightened tensions in the Middle East added to market uncertainty.

With mainland China's financial markets closed for the remainder of the week, the recent rally in Asian markets is expected to pause. Hong Kong's Hang Seng is also closed on Tuesday.

Japan reported its unemployment rate for August eased to 2.5%, down from 2.7% in July

U.S. equities closed higher on Monday, recovering from earlier losses triggered by Powell's remarks. The Dow Jones Industrial Average rose by 0.04% to a record closing high of 42,330.15. The S&P 500 gained 0.42% to also reach a new record close of 5,762.48. The Nasdaq Composite added 0.38%.

Investors had anticipated more aggressive rate cuts from the Federal Reserve in its final two meetings of the year. However, Powell indicated that the central bank would likely stick to quarter-point rate reductions moving forward, citing recent economic data that showed strong growth and consumer spending.

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Out of these, orders worth Rs 1,417 crore relates to transportation division, Rs 520 crore relates to electrical division and Rs 390 crore relates to building division.

These orders are received from state government agencies and private limited company and does not include any internal order,” the company said in a statement.

NCC is a construction and infrastructure sector company. Over the years, it has evolved from a mere contractor to a full-fledged infrastructure solutions provider. The company’s construction endeavours span across the nation and encompass buildings, transportation, water and environment, electrical transmission and distribution, irrigation, mining, and railways projects.

The company's consolidated net profit rose 20.96% to Rs 209.92 crore on a 26.20% increase in revenue to Rs 5,527.98 crore in Q1 FY25 over Q1 FY24.

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NCC has received orders of Rs 2,327 crore in month of September 2024. These include

Transportation division - Rs 1,417 crore
Electrical division - Rs 520 crore
Building division - Rs 390 crore

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The agency has also affirmed the company’s short term rating at ‘CARE A1+’.

CARE Ratings stated that the reaffirmation in ratings assigned to bank facilities and short-term instrument of NCC Limited (NCCL) factors the company’s long and established track record in the construction industry in the last four decades, strong orderbook position backed by sizable order additions resulting in consequential growth in the scale of operations.

The order book is diversified with presence across buildings, water pipelines, irrigation, transmission, mining, transportation and urban infra, among others. The company continues to have projects across pan India. The company ventured in smart metering projects, where it had undertaken three projects aggregating Rs 4,456 crore for which the investment commitment is Rs 528 crore over the next three years. NCCL group is comfortably placed to meet this equity commitment.

Apart from this, CARE Ratings Limited (CARE Ratings) understands there is no other investment requirement in other verticals operated under the group and corporate guarantee (CG) shall not be extended in smart metering special purpose vehicles (SPVs). One of the projects has already achieved financial closure, where no CG has been extended by NCCL.

Driven by a robust order book position, revenue growth continues to be robust at 37% for FY24. Ratings are also backed by moderate profitability metrics with profit before interest, lease rentals, depreciation and taxes (PBILDT) margin range bound between 10-12% of the revenue.

Adequate cash generation from business operation resulted in lower dependence on external borrowings with total debt (including mobilization advance)/PBILDT consistently improving in the last six years and stands at 2.61x for FY24 (PY: 3.48x).

However, above ratings’ strengths are tempered by elevated working capital intensity due to sizable unbilled revenue with gross current asset days (GCA days) at 272 days for FY24.

The company has been making consistent efforts to reduce working capital intensity which are also bearing results indicated by reduction from the past GCA days of 335 days in FY23 and 391 days in FY22.

Improvement has been supported by management’s focus on bidding for projects having strong counter parties with visible funding avenues and restricting exposure to a single state and single counterparty in the orderbook.

Susceptibility of profitability due to volatility in commodity prices, legacy arbitrations and exposure to state government projects are some other credit deterrents.

NCC is a construction and infrastructure sector company. Over the years, it has evolved from a mere contractor to a full-fledged infrastructure solutions provider. The company’s construction endeavours span across the nation and encompass buildings, transportation, water and environment, electrical transmission and distribution, irrigation, mining, and railways projects.

The scrip shed 0.94% to end at Rs 312.25 on the BSE today.

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