Identifying the right opportunity in stock markets is tough. However, to be a successful investor doing the hard work and then grabbing the opportunity on offer is a must to become a successful investor. This example has already been set by big bull Rakesh Jhunjhunwala, who is an idol for many investors. Jhunjhunwala has famous said, “Opportunities will come and go. Are you prepared to grab them?" One such opportunity is right around the corner. An expert at Elara Capital has given a positive outlook along with a buy rating on NCC which is a leading construction and engineering service provider. NCC’s FY20 outlook makes the company a multibagger. If this pans our right, then Rakesh Jhunjhunwala is set reap rich rewards from this stock. 

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NCC is among Jhunjhunwala’s favorite stocks after Titan, Crisil, Escorts, Federal Bank and Lupin. 

Explaining how NCC turned into a hot stock, Ankita Shah analyst at Elara Capital said, “We recently visited the Mumbai-Nagpur Expressway - Package 3 in the Amravati district being executed by NCC for INR 28.5bn (9% of adjusted orderbook of INR 331bn, excluding slow-moving NBCC project of INR 21bn and INR 61bn of Andhra Pradesh projects facing risk of cancellation). The physical progress is 7% & financial of 1% as on May 2019 and expected revenue contribution from the project as per the site manager (name withheld) is INR 12bn in FY20 (9% of our FY20E revenue) and INR 15bn in FY21 (10% of our FY21E revenue).In-house execution, approvals & clearances in place, timely payments by MSRDC and an experienced team of engineers on site (mobilized from the recently completed Agra-Lucknow expressway project) are key positives.”

Shah added, “We expect the working capital cycle can get elongated in 1H; however, the receipt of mobilization advances on new inflows, recovery of loans & advances from subsidiaries and clarity on Andhra Pradesh & slow moving projects could provide some respite in 2H. A presence across housing, metro, defense, airports, irrigation, roads, electrical and expected uptick in order awarding activity in the infrastructure sector would help NCC recoup growth visibility.”

Reiterating her stance on NCC, Shah says, “ We remain confident & retain our estimates.”

Coming back to Jhunjhunwala, his holding in NCC stands at 12.74% or 64,708,266 equity shares valuing up to Rs 631 crore. However, looks like NCC is just warming up on Sensex and Nifty, because the company is well placed for giving hefty returns ahead. 

On stock price, Shah says, “We reiterate Buy with a new TP of INR 162 from INR 200, valuing construction business at INR 151 on 12x (from 15x) FY21E P/E and investments (including loans & advances) in subsidiaries at INR 11 on 0.5x (unchanged) FY21E P/B.”

On Thursday, NCC shares finished at Rs 97.55 per piece mostly muted compared to previous trading session. If current valuation is compared with target price, then NCC shares have a potential of rising to whopping over 66% on the index.