It builds cities. But can’t build stock market trust. Welcome to India’s most underrated infra enigma.
🏗️ At a Glance
NCC Ltd is like that kid in college who did all the group project work but still got no credit. With ₹22,000 Cr in annual revenue, ₹868 Cr in profit, and ROCE hitting 22%, it should be flexing with the big boys like L&T. Instead? Stock is stuck at ₹221, down 32% in one year. Why is NCC still trading like it’s awaiting board exam results?
🧱 1. NCC’s Business: Civil Engineering on Steroids
NCC = Nagarjuna Construction Company. But don’t let the old-school name fool you — this infra veteran is everywhere:
- 🏗️ Construction (98.5% of Revenue)
- Buildings, roads, railways, power infra, water pipelines, irrigation, smart cities, electrical, you name it.
- ⚡ Smart Metering Play – Newly entered segment. Because… buzzwords.
- 📦 Order Book = ₹50,000 Cr+ (Yes, that’s 3.6x annual revenue)
NCC is basically a mini L&T — but without the brand aura or investor fanbase. Sad, but true.
📈 2. Financials: Strong Foundation, But Cracks in Valuation
| Year | Revenue (₹ Cr) | Net Profit (₹ Cr) | ROCE | Debt (₹ Cr) | EPS (₹) |
|---|---|---|---|---|---|
| FY21 | 7,949 | 283 | 11% | 2,062 | 4.4 |
| FY22 | 11,138 | 494 | 12% | 1,302 | 7.9 |
| FY23 | 15,553 | 646 | 19% | 974 | 9.7 |
| FY24 | 20,845 | 740 | 22% | 980 | 11.3 |
| FY25 | 22,199 | 868 | 22% | 1,594 | 13.1 |
📊 Profit has grown at 19% CAGR over 5 years, revenue at 20%, and debt is manageable. Yet stock is stuck in a cement mixer.
🧠 3. So What’s the Problem?
Let’s break it down:
- 🔁 Low ROE (11.7%) – Despite strong profits, return to shareholders is meh.
- 🧱 Execution Risks – Infra = delays, cost overruns, govt tender headaches.
- ⚠️ High Working Capital Needs – Cash tied in receivables & project inventory.
- 💸 Interest cost rising – FY25 interest: ₹680 Cr. That’s 78% of profit before tax.
- 🐢 Public Sector Clientele – Slow payments = faster aging than milk in Chennai summer.
👥 4. Shareholding Plot Twist: FIIs Played Musical Chairs
| Category | Mar 2023 | Mar 2025 | Trend |
|---|---|---|---|
| Promoters | 22.0% | 22.1% | Flat |
| FIIs | 19.9% | 13.8% | 🔻 Dumped 6% |
| DIIs | 12.8% | 15.6% | 🔺 Picking up scraps |
| Public | 45.2% | 48.5% | 🙋♂️ Bagholders rise |
FIIs dumped heavy since June 2024. DIIs buying like it’s on discount. Public still confused.
📉 5. Peer Comparison: The L&T Complex
| Company | Revenue (₹ Cr) | Net Profit (₹ Cr) | ROCE | PE Ratio | MCap (₹ Cr) |
|---|---|---|---|---|---|
| L&T | 74,392 | 6,156 | 14% | 33.1 | 5,03,782 |
| NBCC | 4,642 | 183 | 33% | 52 | 31,678 |
| IRCON | 3,412 | 211 | 12% | 25 | 18,509 |
| NCC | 22,199 | 868 | 22% | 17 | 13,908 |
🤔 Despite better margins & profits than many peers, NCC’s PE ratio is under 17. That’s a bit too discount bin for what it delivers.
🔍 6. Valuation: Fair Value or Fair Game?
Let’s assume:
- EPS FY26 ~ ₹15
- Assign PE range of 18–22 (infra with solid growth, but public sector risk)
🧮 Fair Value Range = ₹270 – ₹330
📉 Current price: ₹221
🎯 Implied upside: 22% – 50%, if the market stops ghosting and gives it L&T-lite respect.
💰 7. Dividend & Cash Flow
- 🧾 Dividend payout: ~17%
- 💵 Cash from Ops FY25: ₹742 Cr
- 🚧 Financing Outflow: -₹247 Cr
- 🧯 Capex: Low — NCC isn’t building factories; it builds for others.
Translation: FCF positive, but capital allocation is conservative.
🚧 8. Risks to Watch
- 🧨 Order book ≠ guaranteed revenue — execution is king
- 🧾 Delayed receivables = interest eats margin
- 👷 Infra labor shortages / material inflation
- 🧠 Shareholder dilution in the name of expansion
🧠 EduInvesting Verdict
NCC is India’s infra contractor juggernaut with L&T ambition but not enough investor validation.
- If you want profits today and drama tomorrow — NCC is for you.
- If you want safety, dividend, and D-Street attention — wait till FIIs return with apology letters.
As they say in infra:
“Project time: 24 months. Stock breakout time: God knows.”
🏷️ Tags:
NCC Ltd, infra stocks India, undervalued EPC company, L&T vs NCC, construction sector stocks, NCC share price, EduInvesting analysis, FIIs selling NCC, smart meter stocks
✍️ Written by Prashant | 📅 20 June 2025
