shares overview construction & contracting civil Nagarjuna Construction Company

Nagarjuna Construction Company (updated - 09 Mar 2010)
After bagging five orders worth Rs 583 crore last month, Nagarjuna Construction Company (NCC) bagged new orders worth Rs 1,221 crore on Monday (a Rs 647-crore expressway construction project and Rs 358-crore turnkey electrical works). The latest orders have helped NCC surpass its order guidance of Rs 8,000 crore for 2009-10, besides enhancing its outstanding order position to about Rs 16,000 crore, or over 3.8 times its revenues in 2008-09, providing good revenue visibility.

The strong order book is aresult of its diversified presence, such as in buildings, transportation, water, electrical and irrigation, along with its foray into power, oil and gas, metals and mining segments. In the power segment, it is developing three power plants with a total capacity of 1,700 Mw, including its own 1,320-Mw power plant that is to be commissioned by 2014. While NCC has acquired land and secured 70 per cent of the coal required for the power project, financial closure is expected soon.

On the back of its strong order book, analysts expect NCC’s core construction business to grow 20 per cent annually over the next two years. Overall growth is expected to be higher, driven by contribution from NCC’s two operational built-operate-transfer-based road projects (113 km), including the 50-km Bangalore Elevated project (commissioned in January 2010). Besides, by end-March 2010, NCC intends to commission two road projects measuring 142 km, followed by a 36-km project, to be commissioned in July 2010.

Notably, it has already prequalified for over 30 road projects worth Rs 27,000 crore. Thus, analysts expect NCC’s road business to bag more orders in future.

Meanwhile, analysts have pegged NCC’s value at Rs 185 per share on the sum-ofthe-parts basis (including the real estate business). While the stock is a good long-term bet, at the current price of Rs 163.30, there is 12-13 per cent upside potential in the near term.
source - BS

Nagarjuna Construction Company (updated - 12 Nov 2010)
The satisfactory performance of Nagarjuna Construction Company (NCC) in the September quarter has come on a lower base. Revenues rose 13 per cent year-on-year (y-o-y) to `1,201 crore, as compared to 1.1 per cent y-o-y growth in the corresponding quarter a year ago. Operating profit margin was maintained at 10.3 per cent despite higher costs, while net profit margin came at 3.8 per cent due to a seven-fold rise in other income at `5.4 crore.

NCC witnessed a slowdown of 13 per cent in its order book at `16,075 crore.

However, the company has maintained its earlier guidance of order inflows (`10,000 crore), standalone sales ( `5,300 crore), consolidated sales ( `7,300 core) and operating profit margin (10-10.5 per cent).

Analysts don’t seem to be too worried about sales and margin targets, but are cautious about the order inflow guidance, as NCC needs orders worth `5,500 crore in the remaining five months of 201011 ( `2,750 crore each in December and March quarters).

Also, if the government’s decision regarding the environmental clearance for the 1,320-Mw venture (expected in a month) goes against the company, it will have to look for alternative locations in Andhra Pradesh, delaying the project. The company has invested `83 crore so far.

Investors also need to keenly track developments in the Dubai real estate project, as the West Asian economy is still not out of the woods. NCC has invested a total of `130 crore in both these projects.

Though the stock, at `152.45, trades at a reasonable 13 times 2011-12 estimated earnings (including value for build-operate-transfer and real estate projects), analysts are cautiously optimistic about the company’s prospects.
source - business standard

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