This stock has become a multibagger for Big Bull Rakesh Jhunjhunwala - Find out why you should buy!
NCC have become a multibagger not only for Rakesh Jhunjhunwala but every investor who holds a piece of this company.
Among many favorite stocks of big bull Rakesh Jhunjhunwala is also construction service provider NCC. Gains from NCC have been above Rs 600 crore. Interestingly, Jhunjhunwala has been increasing his holding in NCC shares over the past few months, among others. NCC has become a new multibagger not only for Jhunjhunwala but every investor who holds a piece of this company. On Monday, NCC shares finished at Rs 99.20 per piece up by 1.38%. The stock has also touched an intraday high and low of Rs 101 per piece and Rs 125.60 per piece respectively. The going has been so good for NCC shares that experts at Edelweiss Securities have given the stock a buy rating.
NCC management is confident of maintaining FY20 revenue and margin at FY19 level. According to the management, it started FY20 with ~INR410bn order book; even assuming that ~INR61bn projects get cancelled, NCC will be left with ~INR350bn worth of orders. This will be sufficient to ensure that the company’s FY20 top line will be at least equal to FY19 revenue of ~INR120bn. Also, the company will be able to maintain EBITDA and PAT margins at FY19 level (11.8% and ~5%, respectively) going ahead.
Parvez Akhtar Qazi and Aditya Chandrasekar analysts at Edelweiss said, “We believe the company’s diversified segmental/geographical presence will help it tackle this issue. We build in lower order accretion and revenue and higher working capital requirements, leading to downward revision in FY20/FY21E EPS by 19%/7%. We maintain ‘BUY’ with revised SOTP-based TP of INR135—INR134/share from the EPC business (12x P/E) and the balance from BOT projects.”
Recently, Binod Modi, Research Analysts at Reliance Securities also said, “NJCC has exhibited an overall improvement in 4QFY19 especially in terms of growth in order inflow along with significant improvement in working capital.”
Further, Modi adds, “NJCC has also done well in terms of reducing its exposure towards its group companies and subsidiaries, as it reduced its exposure by Rs2.7bn in FY19. Looking ahead, we expect NJCC’s both revenue and earnings to clock 14% CAGR over FY19- FY21E. Upwardly revising our earnings estimates by 7%/9% for FY20E/FY21E to factor in better-than-expected performance, we maintain our BUY recommendation on the stock with a revised Target Price of Rs170 (from Rs165 earlier).”
If we take into consideration current stock price levels along with target set, then NCC is set to rise between 36% to a whopping over 71% ahead.
As on March 2019, Jhunjhunwala’s holding in NCC stands at 10.77% with 64,708,266 equity shares worth Rs 641.9 crore.
So, if things go as per the management and Edelweiss, then great returns are in in offing and investors can continue to buy NCC shares and sit back to enjoy the hefty returns.