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NCC Ltd: Decent performance

News: NCC Ltd reported decent set of numbers during Q2FY22 with standalone revenue improving 42.7% YoY to Rs.2,199 crore, backed by its strong order book position, and pick-up in execution post second wave disruptions. Operating margin stood at 10.8%, down 286 bps YoY. Consequently, operating profit improved 12.8% YoY to Rs. 236.6 crore. Decent operating performance, benign depreciation and interest cost coupled with muted tax outgo has translated into 78.5% YoY growth (to Rs.104.3 crore) in reported PAT. However, the company has booked an exceptional gain of Rs.31.1 crore. adjusted to these, the PAT has improved 25.2% YoY to Rs.73.1 crore.

Views: We are positive on NCC’s growth prospects given a) the strong order book position, b) expected pick-up in execution, c) stable margins, d) debt reduction, and e) improvement in working capital cycle