NCC shares have a 38% upside potential, CLSA says, advises buying the dips
Published on 19/05/2025 08:25 AM
NCC shares have a 38% upside potential, CLSA says, advises buying the dipsCLSA has recommended investors to use any volatility with regards to its cyclically weak FY26 guidance as an opportunity to add the stock.By Hormaz Fatakia May 19, 2025, 8:25:53 AM IST (Published)2 Min ReadShares of NCC Ltd., the construction company, where Rekha Jhunjhunwala has a substantial stake, have the potential to surge up to 40% from current levels, brokerage firm CLSA said in its note.
CLSA has an "outperform" rating on NCC, with a price target of ₹315, which implies an upside potential of 38% from Friday's closing levels.
The brokerage said that NCC's results in the fourth quarter surprised with stellar order inflow, leading to an order backlog growth of 21% from the same quarter last year.
While execution remained flat year-on-year, the 100 basis points margin expansion drove a 20% growth in its net profit from last year.
NCC has an order backlog of ₹71,500 crore, indicating a growth of 29% sequentially, as order inflows began in Andhra Pradesh following an election ban for orders.
However, its guidance for the current financial year points to a slow pick-up in execution and margins, and as a result, CLSA has cut NCC's financial year 2026 and 2027 Earnings Per Share (EPS) targets by 10% and 12% respectively.
Despite this, NCC remains the most liquid of the water theme plays as 17% of its FY25 order backlog came from this segment, according to CLSA, who also added that the stock is well positioned for the Modi 3.0 capex cycle with an underleveraged balance sheet.
The brokerage has recommended investors to use any volatility with regards to its cyclically weak FY26 guidance as an opportunity to add the stock.
As of the March quarter shareholding pattern, Rekha Jhunjhunwala has a 10.63% stake in NCC.
Shares of NCC ended 1% lower on Friday at ₹227.06. The stock is down 37% from its 52-week high.Continue ReadingCheck out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!TagsNCCRekha Jhunjhunwalashare market today