NCC - NCC Limited Share Price

Management Outlook:
NCC Limited's management revised FY25 revenue growth guidance downward to ~5% (from earlier expectations) and EBITDA margin to ~9.25%, citing delays due to elections, elongated billing cycles, and slower payments. However, the outlook remains cautiously optimistic for FY26, driven by improved execution post-elections and increased government CAPEX (budgeted to rise 16.4% YoY to Rs.19.8 lakh crore).

Key Points:

1. Order Book & Pipeline:

   • Order book stands at Rs.55,548 crore (Buildings: 38%, Transportation: 19%, Electrical T&D: 19%).
   • Robust pipeline of Rs.2.4 lakh crore across verticals and states.

2. Sector Performance:

   • Buildings & Transportation divisions show strong traction.
   • Water, Mining, and Irrigation divisions face slower execution.

3. Debt & Working Capital:

   • Gross debt rose to Rs.2,415 crore (vs. Rs.1,005 crore at FY24 start) due to delayed payments.
   • Working capital days increased to 95 days (from 65 days), with unbilled revenue at Rs.6,151 crore.

4. Margins & Recovery:

   • Q3 EBITDA margin fell to 8.77% (vs. 10.1% YoY) but expected to recover to ~9.5% in Q4 with higher revenue.
   • Collections likely to improve in Q4 as governments prioritize year-end spending.

5. Key Projects:

   • Smart Meters: Execution ongoing in Bihar (3 lakh installed); Maharashtra projects pending clearances.
   • Jal Jeevan Mission (JJM): Balance order book of Rs.4,700 crore; delays due to election disruptions.

6. Government CAPEX Boost:

   • Union Budget FY26 emphasizes infrastructure, with central CAPEX rising 10.1% and grants for capital assets up 43%.

Challenges:

• Election-related slowdowns impacted execution and payments.
• Andhra Pradesh exposure (~Rs.1,150 crore pending) and debt reduction remain focal points.

Management expects normalization in FY26, leveraging India's infrastructure push and a stable political environment.

Question 1: Shravan Shah (Dolat Capital)
Question Text: "Sir, a couple of things. So, first, just trying to even if let us say 5% of the revenue guidance that we have reduced from 15% plus to 5%. So, that also if I broadly calculating it means that in the 4th Quarter also we are looking at kind of 1% kind of a degrowth, so if you can clarify that? And in terms of the margin when we are saying 9.25% for full year, so 9 months we have 9%, so in 4th Quarter, are we now again looking at 9.5%-10% kind of a margin and is that margin sustainable going forward?"
Summary of Answer: Management confirmed a Q4 revenue decline of ~1-2% to achieve the revised 5% annual growth. They expect Q4 EBITDA margins of ~9.5% due to normalized execution and absorption of fixed costs, which they consider sustainable.

Question 2: Prithvi Raj (Unifi Capital)
Question Text: "Could you explain the delay in payment cycles? Which projects are impacted? How is Maharashtra's execution post-elections?"
Summary of Answer: Payment delays stemmed from election-related bureaucratic slowdowns, affecting projects across states. Post-elections, execution in Maharashtra is expected to improve with the new government. The order pipeline remains strong (~Rs.2.45 lakh crore) across verticals and geographies.

Question 3: Jainam Jain (ICICI Securities)
Question Text: "With only Rs.13,608 crore orders in 9M FY25, how will NCC achieve its Rs.20,000-22,000 crore FY25 guidance? What caused the debt spike?"
Summary of Answer: NCC is L1 in projects worth Rs.8,000-10,000 crore, expected to convert to orders in Q4. Debt increased due to elongated billing cycles and slower collections, but management anticipates improvement post-election.

Question 4: Deepak Poddar (Sapphire Capital)
Question Text: "What is FY26 debt reduction target? Are execution challenges persisting?"
Summary of Answer: Debt reduction depends on improved collections, particularly in Q4. Execution is expected to normalize as government activity resumes post-elections. FY26 guidance will be shared post-budget finalization in April-May.

Question 5: Parvez Qazi (Nuvama Group)
Question Text: "Are JJM payments delayed? Any updates on Andhra Pradesh and smart meters?"
Summary of Answer: JJM faced delays due to elections, but recovery is expected. Andhra Pradesh is resolving legacy payments (~Rs.1,150 crore due by March). Bihar smart meters (3 lakh installed) are progressing; Maharashtra projects await clearances.

Question 6: Dhananjay Mishra (Sunidhi Securities)
Question Text: "Is Maharashtra's pipeline robust? Is JJM slowdown linked to central funding cuts?"
Summary of Answer: Maharashtra's pipeline includes upcoming expressways, part of the broader Rs.2.4 lakh crore opportunities. JJM delays were election-driven, not funding-related, and recovery is anticipated.

Question 7: Vaibhav Shah (JM Financial)
Question Text: "Update on AP exposure and Vizag deal repayment?"
Summary of Answer: AP exposure includes Rs.1,150 crore (capital city) due by March and Rs.200-250 crore (ongoing projects). Vizag loan repayment (Rs.374 crore) is expected over the next two years.

Question 8: Dheeraj Ram (Ashika Institutional Equities)
Question Text: "What is the Ken Betwa project's pipeline? When will execution start?"
Summary of Answer: River interlinking offers significant opportunities, but specifics depend on government action. Ken Betwa execution is pending approvals, likely starting in FY26.

Question 9: Parth Thakkar (JM Financial)
Question Text: "Smart meter share in order book? JJM completion timeline? Capex guidance?"
Summary of Answer: Smart meters constitute ~9% of orders. JJM's Rs.4,700 crore balance may extend beyond June 2025. FY25 Capex is Rs.250 crore, with Rs.27 crore remaining.

Question 10: Vishal Periwal (Antique Stock Broking)
Question Text: "Details on smart meter orders (Bihar/Maharashtra)? JJM segment classification?"
Summary of Answer: Bihar's order is Rs.2,300 crore; Maharashtra's two projects total Rs.5,700 crore. JJM execution spans water, buildings, and electrical divisions.

Question 11: Saket Kapoor (Kapoor Company)
Question Text: "Clarify Q4 revenue guidance (~Rs.6,000-6,400 crore) and BharatNet updates."
Summary of Answer: Q4 revenue is projected at Rs.6,000-6,400 crore (flat YoY). BharatNet orders remain speculative; no formal communication yet. January's order disclosure followed policy norms.