Rakesh Jhunjhunwala-backed multibagger PSU stock sheds 42% in six months: Axis Securities eyes 10% upside: Buy or sell?

NCC share price: Late billionaire investor Rakesh Jhunjhunwala-backed portfolio stock NCC has declined 42 per cent in the last six months, yet the public sector undertaking (PSU) share price remains a multibagger-favorite for investors. The late Big Bull-backed mulitbagger PSU stock has delivered 193 per cent returns in the last three years and 347 per cent in the last five years.

Based in Hyderabad, NCC is the most diversified construction and operates across multiple segments, including roads, buildings, irrigation, water, electrical, metals, mining, and railways. Apart from projects in India, NCC has an international presence through its subsidiaries in Muscat and Dubai. 

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NCC Q3 Results

On a consolidated basis, NCC Ltd reported a turnover of ₹5,382.86 crore (including other income) for the third quarter of the current financial year, compared to ₹5,287.74 crore in the corresponding quarter of the previous year.

The PSU recorded an EBITDA of ₹540.90 crore and a net profit attributable to shareholders of ₹193.18 crore, compared to ₹505.41 crore in the year ago period. The basic and diluted EPS for the third quarter stood at ₹3.08, compared to ₹3.51 in the corresponding quarter of the previous year.

NCC share price trend

In the previous session, shares of NCC declined over three per cent to hit an intraday low of ₹186.45 compared to a 52-week low of ₹364.50 before settling 3.04 per cent lower at ₹186.90 apiece on the BSE. The stock has declined 32 per cent in three months and 23 per cent in the last 30 days.

Jjhunjhunwala's shareholding in the stock likely stands around 10 per cent. Despite the current weakness in the stock, domestic brokerage firm Axis Securities has given a ‘buy’ rating on the stock and sees a potential upside of 10 per cent in the near term. The PSU's robust order book, diversified revenue profile, and government initiatives are among the key growth drivers.

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NCC share price crash: Should you buy, sell, or hold? Here's a 3-point analysis

1.Robust order book to drive revenue growth: As of December 31, NCC's order book stood at ₹55,548 crore across various segments, providing revenue visibility for the next 2-3 years. “With its strong execution track record, NCC is well-positioned for steady revenue growth,” said Axis.

2.Strong bidding pipeline: The company has a bidding pipeline of ₹2.45 lakh crore across all segments and states. For FY25, it expects an order inflow of ₹20,000-22,000 crore across all segments. As of 9MFY25, the order inflow stood at ₹13,600 crore, with the company being L1 in projects worth ₹8,000-10,000 crore, which it expects to materialize by Q4FY25.

3.Diversified portfolio: The company's business portfolio is diversified across T&D (19 per cent), Buildings (38 per cent), Transportation (19 per cent), Water & Railways (10 per cent), Irrigation (nine per cent), and Mining (five per cent). 

“It has two smart meter projects in Bihar and Maharashtra worth ₹7,800 crore. In Q3FY25, NCC secured a river interlinking project, an initiative by the central government, and expects more orders from this segment,” said Axis Securities.

NCC Ltd is one of India's largest listed construction companies by revenue, backed by a well-diversified portfolio and strong execution capabilities. The brokerage also highlighted that delays in project execution and lower order intake are among the stock's key risks.

Also Read: NCC stock crashes over 14% to 11-month low after weak Q3 numbers

NCC Share Price Brokerage View

Analysts at Axis Securities have assigned a ‘buy’ rating on the stock at a target price (TP) of ₹213. "The NCC stock is trading at a 15x/13x/10X FY25E/FY26E/FY27E EPS respectively. We recommend a BUY rating on the stock with a TP of ₹213/share, implying an upside of 10 per cent from the CMP," said Axis Securities on NCC.

Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts, consider individual risk tolerance, and conduct thorough research before making investment decisions, as market conditions can change rapidly, and individual circumstances may vary.