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Nagarjuna Construction Company
Nagarjuna Construction Company (NCC) posted poor set of numbers for
2QFY2012 below our and street expectations. For 2QFY2012, NCC reported a
9.2% yoy decline in its top line to `1,090cr, which was below our/street
expectations of `1,261cr/`1,271cr. EBITDA margin for the quarter came in at
9.5%, lower than our estimate of 10.3%. Interest cost during the quarter came in at
`70.9cr, a yoy/qoq jump of 89.4%/10.9%, which was above our estimates. The
company’s bottom line came in at `11.4cr, registering a yoy decline of 75.2%,
owing to subdued top-line growth and escalating interest costs – much lower than
our/street estimate of `29.8cr/`29.1cr.
The current outstanding order book of NCC stands at `16,570cr, with order
inflow of `1,746cr for 2QFY2012. Going ahead, we believe the company’s
order inflow would be driven by EPC work of its own power plant. However,
earnings would continue to reel under pressure due to higher interest cost on
the back of higher debt requirements to fund its investments in the power
project and on potential winning of road BOT projects. At the current price, the
stock is trading at attractive valuations (4.4x its FY2013E earnings adjusted for its
investments and subsidiaries) and at 0.5x FY2013E on P/BV basis (standalone).
Our revised target price of `75 (earlier `82) is arrived on SOTP basis and implies
an upside of ~38.0% from current levels; hence, we maintain Buy on the stock.
HEG
For 2QFY2012, HEG Ltd. reported revenue growth of 6.5% yoy to `319cr (from
`300cr in 2QFY2011). The company's OPM contracted by 987bp to 10.2% in
2QFY2012 from 20.1% in 2QFY2011 due to higher raw-material cost (up by 27%
yoy) and forex loss of `11.6cr. PAT dipped by 55% yoy to `14cr as compared to
`30cr in 2QFY2011. Tax was substantially low at 7% for the quarter. Buyback of
shares has been completed to the extent of 99%. The stock rating is currently under
review.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Nagarjuna Construction Company
Nagarjuna Construction Company (NCC) posted poor set of numbers for
2QFY2012 below our and street expectations. For 2QFY2012, NCC reported a
9.2% yoy decline in its top line to `1,090cr, which was below our/street
expectations of `1,261cr/`1,271cr. EBITDA margin for the quarter came in at
9.5%, lower than our estimate of 10.3%. Interest cost during the quarter came in at
`70.9cr, a yoy/qoq jump of 89.4%/10.9%, which was above our estimates. The
company’s bottom line came in at `11.4cr, registering a yoy decline of 75.2%,
owing to subdued top-line growth and escalating interest costs – much lower than
our/street estimate of `29.8cr/`29.1cr.
The current outstanding order book of NCC stands at `16,570cr, with order
inflow of `1,746cr for 2QFY2012. Going ahead, we believe the company’s
order inflow would be driven by EPC work of its own power plant. However,
earnings would continue to reel under pressure due to higher interest cost on
the back of higher debt requirements to fund its investments in the power
project and on potential winning of road BOT projects. At the current price, the
stock is trading at attractive valuations (4.4x its FY2013E earnings adjusted for its
investments and subsidiaries) and at 0.5x FY2013E on P/BV basis (standalone).
Our revised target price of `75 (earlier `82) is arrived on SOTP basis and implies
an upside of ~38.0% from current levels; hence, we maintain Buy on the stock.
HEG
For 2QFY2012, HEG Ltd. reported revenue growth of 6.5% yoy to `319cr (from
`300cr in 2QFY2011). The company's OPM contracted by 987bp to 10.2% in
2QFY2012 from 20.1% in 2QFY2011 due to higher raw-material cost (up by 27%
yoy) and forex loss of `11.6cr. PAT dipped by 55% yoy to `14cr as compared to
`30cr in 2QFY2011. Tax was substantially low at 7% for the quarter. Buyback of
shares has been completed to the extent of 99%. The stock rating is currently under
review.
Sounds like the best construction company to run to!
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