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Key Takeaways
Consolidated revenue growth guidance of 16% for FY12
For FY12, the management guided consolidated revenue at INR72b (up 16%),
standalone revenue at INR58b (up 14%), international construction revenue at INR11b
(flat) and real estate/BOT project revenue at INR4.5b.
Order intake guidance excluding in-house power project BTG (1,320MW) order of
INR50b stays at INR90b. This includes roads (INR20b), buildings (INR35b), water
(INR15b), and others.
EBITDA margin to be maintained at 9.5% in FY12
NCC is likely to maintain its EBITDA margin at 9.5-10% in FY12. This will be driven
by: (1) escalation-based contracts contributing 70% of the order book; NCC will
benefit from the pass through, given rising commodity prices, (2) favorable change
in order book resulting in an increase in relatively high-margin buildings (now
contributing 38% of the order book, up from 24% in FY10) and decline in transport
contribution (at 4% now from 15.3% in FY08).
The share of international orders in revenue has declined to 16% in 1QFY12 from
21% in 1QFY11; we expect this percentage to decline further in FY12.
Cumulative investments in RE/BOT projects at INR12b, including advances
NCC has so far invested INR12b in real estate and road BOT projects (including
advances of INR2.9b). The outstanding equity commitment stands at INR1.8b-2b.
Four out of five road BOT projects are operational and the remaining one is likely to
achieve COD by September 2011. The operational road projects should improve
NCC's operational cash flows. The Brindavan Infra road project is complete. Toll
collection, which was INR1.4m per day initially, has now reached INR2m per day.
NCC expects this to reach INR2.5m per day by FY12-end. UP Tollway has also achieved
COD and toll collection started from April 2011; current collection is INR1.8m per
day. The Pondicherry Tindivam project is in advanced stage of completion and it is
likely to declare COD by September 2011.
NCC expects financial closure of its 1,320MW thermal power project in Krishnapatnam
in the next two-three months. The project lenders have asked for 35% upfront
equity contribution for the release of 35% of the debt. NCC's total equity requirement
in the project stands at INR9.7b, out of which it has already invested INR1.5b. To
achieve the threshold of 35% equity contribution, NCC has to invest INR2b more.
The total project cost is at INR70b, to be financed with D:E of 3:1.
Valuation and view
Buy with an SOTP-based price target of INR104 - core business: INR71/share (6x
FY13E EV/EBITDA) and BOT/RE investments: INR33/share.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Key Takeaways
Consolidated revenue growth guidance of 16% for FY12
For FY12, the management guided consolidated revenue at INR72b (up 16%),
standalone revenue at INR58b (up 14%), international construction revenue at INR11b
(flat) and real estate/BOT project revenue at INR4.5b.
Order intake guidance excluding in-house power project BTG (1,320MW) order of
INR50b stays at INR90b. This includes roads (INR20b), buildings (INR35b), water
(INR15b), and others.
EBITDA margin to be maintained at 9.5% in FY12
NCC is likely to maintain its EBITDA margin at 9.5-10% in FY12. This will be driven
by: (1) escalation-based contracts contributing 70% of the order book; NCC will
benefit from the pass through, given rising commodity prices, (2) favorable change
in order book resulting in an increase in relatively high-margin buildings (now
contributing 38% of the order book, up from 24% in FY10) and decline in transport
contribution (at 4% now from 15.3% in FY08).
The share of international orders in revenue has declined to 16% in 1QFY12 from
21% in 1QFY11; we expect this percentage to decline further in FY12.
Cumulative investments in RE/BOT projects at INR12b, including advances
NCC has so far invested INR12b in real estate and road BOT projects (including
advances of INR2.9b). The outstanding equity commitment stands at INR1.8b-2b.
Four out of five road BOT projects are operational and the remaining one is likely to
achieve COD by September 2011. The operational road projects should improve
NCC's operational cash flows. The Brindavan Infra road project is complete. Toll
collection, which was INR1.4m per day initially, has now reached INR2m per day.
NCC expects this to reach INR2.5m per day by FY12-end. UP Tollway has also achieved
COD and toll collection started from April 2011; current collection is INR1.8m per
day. The Pondicherry Tindivam project is in advanced stage of completion and it is
likely to declare COD by September 2011.
NCC expects financial closure of its 1,320MW thermal power project in Krishnapatnam
in the next two-three months. The project lenders have asked for 35% upfront
equity contribution for the release of 35% of the debt. NCC's total equity requirement
in the project stands at INR9.7b, out of which it has already invested INR1.5b. To
achieve the threshold of 35% equity contribution, NCC has to invest INR2b more.
The total project cost is at INR70b, to be financed with D:E of 3:1.
Valuation and view
Buy with an SOTP-based price target of INR104 - core business: INR71/share (6x
FY13E EV/EBITDA) and BOT/RE investments: INR33/share.
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