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NCC (NCCL.BO)
Alert: Q2FY12 Disappoints, PAT 48% below CIRA
Recurring PAT down 77% YoY, 48% below CIRA – NCC reported Q2FY12 recurring
PAT of Rs114mn, down 77% YoY and 48% below our estimates (~57% below
consensus). The PAT miss was due to (1) ~11% revenue miss (2) ~24% lower other
income/other operating income (3) sharp rise in interest costs (up 89% YoY, ~8%
higher than CIRA est.)
FY12 revenue guidance cut? NCC has guided for standalone revenues of Rs56bn
(NCC indicated Rs59bn after Q1FY12). Management mentioned that it had achieved
~95-96% of budgeted standalone sales in 1HFY12 with minor slippages in Q2FY12
due to delays in (1) road projects in UP due to extraordinary rain, (2) few projects in AP
due to labor strikes and political agitations. Implies 21% YoY growth for H2FY12 –
NCC expects incremental revenues of ~Rs5bn in H2FY12 to make up for the shortfall
in H1FY12, largely from water, electrical and irrigation segments. where the company
has received new orders recently.
Order Inflow guidance of ~Rs90bn maintained - The buildings segment contributed
to ~55% of the H1FY12 order inflows. Management mentioned that while government
sector constituted ~85-90% of the current order book, the share of private orders could
go up with their higher presence in the buildings segment. EBITDA guidance
maintained, but PAT remains a worry – Management was confident of maintaining
EBITDA margins at current levels, but indicated that the real issue was at the PAT level.
Other Takeaways – (1) The average borrowing rate has gone up by ~50bps QoQ.
Management mentioned that the company is now borrowing at ~11.25%. (2) The
company has brought down its receivable days to ~104 days (down from ~108 in
Q1FY12 and ~105 days in Q4FY11).
Loan documentation signed for Nelcast project - The project cost of ~Rs71bn is
expected to be funded via debt:equity of 3:1. Management mentioned that the
company has signed the loan documentation with REC, PFC and ICICI Bank and
expects to declare closure in Nov 2011 after satisfaction of pre-disbursement criteria.
An interest rate of ~13% is applicable for the first year. For the coal linkage, NCC
expects to import ~15mmt from its mine in Indonesia. NCC has invested ~Rs80-100mn
out of Rs150mn, which is its total estimated investment in the mine.
Update on projects – (1) All BOT projects are operational except Pondicherry
Tindivanam, where the management expects CoD in Nov. (2) the Himachal Sorang
project is on track to achieve CoD in Mar 2012. NCC is in discussions for ~100MW
short term PPAs where the company expects rates of ~Rs3.50-4.00/kWh. Management
indicated an incremental equity requirement of ~Rs200-300mn in the projects.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
NCC (NCCL.BO)
Alert: Q2FY12 Disappoints, PAT 48% below CIRA
Recurring PAT down 77% YoY, 48% below CIRA – NCC reported Q2FY12 recurring
PAT of Rs114mn, down 77% YoY and 48% below our estimates (~57% below
consensus). The PAT miss was due to (1) ~11% revenue miss (2) ~24% lower other
income/other operating income (3) sharp rise in interest costs (up 89% YoY, ~8%
higher than CIRA est.)
FY12 revenue guidance cut? NCC has guided for standalone revenues of Rs56bn
(NCC indicated Rs59bn after Q1FY12). Management mentioned that it had achieved
~95-96% of budgeted standalone sales in 1HFY12 with minor slippages in Q2FY12
due to delays in (1) road projects in UP due to extraordinary rain, (2) few projects in AP
due to labor strikes and political agitations. Implies 21% YoY growth for H2FY12 –
NCC expects incremental revenues of ~Rs5bn in H2FY12 to make up for the shortfall
in H1FY12, largely from water, electrical and irrigation segments. where the company
has received new orders recently.
Order Inflow guidance of ~Rs90bn maintained - The buildings segment contributed
to ~55% of the H1FY12 order inflows. Management mentioned that while government
sector constituted ~85-90% of the current order book, the share of private orders could
go up with their higher presence in the buildings segment. EBITDA guidance
maintained, but PAT remains a worry – Management was confident of maintaining
EBITDA margins at current levels, but indicated that the real issue was at the PAT level.
Other Takeaways – (1) The average borrowing rate has gone up by ~50bps QoQ.
Management mentioned that the company is now borrowing at ~11.25%. (2) The
company has brought down its receivable days to ~104 days (down from ~108 in
Q1FY12 and ~105 days in Q4FY11).
Loan documentation signed for Nelcast project - The project cost of ~Rs71bn is
expected to be funded via debt:equity of 3:1. Management mentioned that the
company has signed the loan documentation with REC, PFC and ICICI Bank and
expects to declare closure in Nov 2011 after satisfaction of pre-disbursement criteria.
An interest rate of ~13% is applicable for the first year. For the coal linkage, NCC
expects to import ~15mmt from its mine in Indonesia. NCC has invested ~Rs80-100mn
out of Rs150mn, which is its total estimated investment in the mine.
Update on projects – (1) All BOT projects are operational except Pondicherry
Tindivanam, where the management expects CoD in Nov. (2) the Himachal Sorang
project is on track to achieve CoD in Mar 2012. NCC is in discussions for ~100MW
short term PPAs where the company expects rates of ~Rs3.50-4.00/kWh. Management
indicated an incremental equity requirement of ~Rs200-300mn in the projects.
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