NCC - NCC Limited Share Price

Management's outlook for NCC Limited reflects caution due to significant challenges in the business environment, specifically citing unprecedented rains and elongated payment cycles as key factors impacting operations. Consequently, the management has withdrawn its revenue guidance for fiscal year 2026, stating that a clearer outlook may emerge by March 2026.

Key forward-looking points include:

1. Order Book Status: The order book stands at INR 71,957 crores as of September 30, 2025, reflecting growth from INR 71,568 crores at the beginning of the fiscal year. New orders worth INR 6,223 crores were secured in Q2 FY26, mainly from Buildings, Water, and Irrigation divisions.

2. Financial Performance: Turnover for Q2 FY26 was reported at INR 4,585 crores, down from INR 5,224 crores in the corresponding quarter last year, indicating a decline of 12%. For the first half of FY26, cumulative turnover was INR 9,793 crores versus INR 10,783 crores the previous year.

3. Segment Breakdown: The order book consists of INR 22,492 crores from Buildings (31%), INR 17,361 crores from Transportation (24%), and INR 15,013 crores from Electrical (21%), among others.

4. Debt Levels: The company's debt increased to INR 2,115 crores by the end of Q2 from INR 1,852 crores at the beginning of the quarter, with net debt standing at INR 1,890 crores.

5. Operational Challenges: The management cited prolonged rainfall disrupting project execution and delayed client payments leading to revenue shortfalls, emphasizing a need for improved cash flow management.

6. Future Capex: Capital expenditure has been raised to INR 1,050 crores for the year, driven by a significant mining order received in October.

In summary, while the company is poised with a substantial order book, management expresses caution amidst operational challenges, reflecting an intention to reassess the outlook after addressing the current hurdles.

Questions and Answers from Q&A Section of NCC Limited's Q2 FY26 Earnings Call

Question 1: "What exactly has changed compared to the last quarter that you have dropped the guidance despite having a very large order book? Is it that the work has not started for a very significant part of the order book and you're finding it difficult to book revenues?"

Answer: "The drop in guidance is primarily due to unprecedented rains in Q2 and elongated payment cycles, which impacted turnover. While our order book remains strong, these factors hindered our ability to execute effectively. We are optimistic about recovery in upcoming quarters."

Question 2: "Are we seeing a recovery now, as you're already in the midst of Q3? Are you seeing a recovery that can help us post a better number compared to last year's H2?"

Answer: "We will provide an update by the end of March. Current indicators suggest potential improvement, but it is premature to make definitive claims about recovery at this stage."

Question 3: "In the last call, you had said that almost INR28,000 crores worth of orders are yet to receive notice to proceed. What quantum of the orders have work that has not started?"

Answer: "The INR28,000 crores mentioned encompasses orders yet to start due to mobilization periods and required design clearances. These will begin execution in Q3 and Q4."

Question 4: "Have you seen any payment coming in for the JJM receivables? Is it still around INR1,700 crores?"

Answer: "The receivables are approximately at INR1,700 crores, with some traction occurring. We expect payments to happen soon, providing a boost in cash flow."

Question 5: "What is the current executable order book where work is already underway?"

Answer: "The entire order book is executable. Apart from the water projects facing delays, we are progressing on other segments effectively, and projects awarded in Q1 and Q2 should generate revenue by Q4."

Question 6: "Is there a reason you're deferring guidance for H2? Given a strong order book, what stops you from providing insight?"

Answer: "With elongated payments affecting a significant segment of our operations, it is prudent not to predict growth. We aim to remain transparent and will revisit guidance later."

Question 7: "What is the incremental investment required for the smart meter projects and the time frame?"

Answer: "We anticipate needing an additional INR280 crores for the smart meters, with a completion timeline of approximately 1 to 1.5 years."

These summarized responses encapsulate the main concerns and insights from the earnings call within the specified character limits while maintaining the accuracy of numbers and information provided.