NCC - NCC Limited Share Price

NCC Limited's management provided an optimistic outlook during the Q4 and FY '25 earnings call. The company has achieved its highest-ever order book, amounting to INR 71,568 crores, and secured orders worth INR 32,888 crores during FY '25, which is a 50% increase over the upper band of previous guidance. Revenue increased by 5% year-on-year, in line with market expectations, and the EBITDA margin was reported at 9.1%.

Looking ahead to FY '26, management has indicated a strong pipeline of future projects estimated to total approximately INR 2.55 lakh crores. For this financial year, NCC has guided for an order inflow of INR 22,000 crores to INR 25,000 crores and anticipates revenue growth of 10%, with an EBITDA margin projected between 9% to 9.25%. They emphasized that the current year's order inflow guidance includes approximately INR 7,000 to INR 8,000 crores of L1 (lowest bid) orders.

In terms of order book specifics, the Buildings and Transportation divisions hold order books of INR 22,440 crores and INR 17,929 crores, respectively. Additionally, the Electrical T&D division contributed INR 16,666 crores to the order book, while other divisions like Irrigation and Water contributed INR 4,189 crores and INR 4,782 crores, respectively.

The management also highlighted the importance of timely payments from clients, stating that revenue growth partly hinges on the clients' ability to mobilize funds, which has reflected in past delays. They concluded that any updates to guidance would be communicated if conditions change adequately. Overall, the management expresses confidence in maintaining a healthy growth trajectory, keeping in mind the challenges posed by client payment timelines.

Here are the major questions and detailed answers from the Q&A section of the earnings transcript:

1. Question: "Sir, the first question is on the revenue. So, though we have achieved our revised guidance for FY '25, 5% growth, but compared to the original where we were looking at 15% and now, we are saying 10% growth in FY '26. Don't you think this is on the lower side given the kind of the order inflow that we have received, which is even higher than what we were looking at in FY '25?" Answer: You're absolutely right. We initially guided for 15% growth last year, but delivered only 5%. Now, we're aiming for 10% growth in FY '26, which reflects our commitment. This guidance also takes into account the need for timely payments from clients and the uncertain environment. We aim to keep you updated if circumstances change.

2. Question: "This order inflow of INR22,000 crores to INR25,000 crores that we are looking at in FY '26, if you can clarify. I think last time we were having INR8,000 crores to INR10,000 crores as the L1 orders. So how much L1 do we right now have? And does this include the L1?" Answer: We have an L1 project of about INR7,000 crores to INR8,000 crores. The order inflow guideline of INR22,000 crores to INR25,000 crores does indeed include this L1 amount. Some previous L1 projects have already converted into firm orders reflected in our order book.

3. Question: "What is the Jal Jeevan Mission order book right now? And are you seeing an improvement in execution and payment?" Answer: The current order book for the Jal Jeevan Mission stands at about INR4,300 crores. While about two-thirds of projects are completed, delays in payments from the central government persist, and we're waiting on around INR1,500 crores to be received.

4. Question: "Understood, sir. The second question is on the Andhra Pradesh state capital projects. You obviously received a couple of projects in the last few months. Is there any more activity that is happening there?" Answer: We have around INR9,000 crores to INR9,500 crores in capital city projects. There is increased demand from clients for rapid execution, and we're continuously monitoring announcements from the Chief Minister for new projects.

5. Question: "So what's the target for the end of the year? Do we expect a significant reduction in the debt number?" Answer: We expect the debt to stand around INR1,700 crores by the end of FY '26. Although we plan for a gradual increase due to investments, our focus will remain on managing debt effectively.

6. Question: "On the transportation and water verticals, we have seen that orders -- new orders have been a little bit slow to come by in the last 5, 6 quarters. What are we seeing here?" Answer: We do have a healthy pipeline with various projects. In transport, our order book is INR17,929 crores, which is about 25% of our total orders. There's optimism that new projects will emerge soon across both transport and water sectors.

7. Question: "What is the gross debt on the stand-alone level as of now?" Answer: Our gross debt as of now stands at INR1,484 crores.

8. Question: "In the case of Vizag land, what is the total balance left?" Answer: The total balance outstanding in the Vizag land receipts, including interest, is about INR375 crores.

9. Question: "What would have been our total execution or construction revenues in FY '25, including the work that we would have done in our mining projects?" Answer: The total construction revenue for FY '25 stood at INR21,756 crores.

10. Question: "For the BSNL project, how much would be the bought-out component?"

Answer: We need further assessment of the BSNL project before determining the bought-out component, as we've only recently secured it. This information will be shared as soon as available.

These questions and answers reflect key insights and strategic directions discussed during the earnings call.