With about Rs 800 billion orders, which is about 13.5 times its FY18 revenues, already in its kitty and more to follow, there is significant revenue visibility. The key, however, remains execution of projects and that could improve.
The project awards for execution by NBCC to various contractors during the second half of FY18 (Pragati Maidan, Nauroji Nagar in Delhi and irrigation projects, among others) is worth Rs 100 billion. Another Rs 150 billion worth of projects are expected to be awarded in FY19. These can significantly lift the company’s earnings.
Analysts at Anand Rathi said that as work has gradually been gaining pace, NBCC’s recent subdued revenue performance will be short-lived, as the company seems geared to tender out more (project work to contractors) in FY19.
Analysts at Sharekhan, who have cut their FY19-20 earnings estimate by 10-12 per cent, feel that the stock has corrected significantly from the recent highs and as earnings are to rebound in the next two years, weakness could be history.