Broker's Call: NCC gets an upgrade

Prabhudas Lilladher has upgraded NCC from reduce to accumulate with a target price of Rs 46. NCC, in Q3FY13, has reported a topline of Rs 1,180 crore, posting de-growth of 6.4 per cent YoY and was below expectations.

The work was affected (to the tune of Rs 200 crore) due to a delay on the client side. On a consolidated basis too, revenues were flat YoY and stood at Rs 1,520 crore, down QoQ on account of low performance from subsidiaries. The company is further expecting Rs 55 crore from real estate sale.

Despite stake-sale news, the stock has come down (below our target price) drastically by 30 per cent in the last one month when we had a reduce on the stock (Jan 7 CMP Rs 59, TP Rs 50).

Now the negatives are more or less factored in. Some re-rating in terms of positive news for the infrastructure sector in the budget can provide the required momentum.