(Reuters) -Indian construction company NCC reported a 5% second-quarter profit drop on Thursday, hurt by slower project execution amid monsoon rains.
Consolidated net profit fell to 1.55 billion rupees ($17.63 million) in the quarter ended September 30, from 1.63 billion rupees a year earlier.
Revenue slid to 45.43 billion rupees, from 51.96 billion rupees a year ago.
For further earnings highlights, click here.
KEY CONTEXT
The July to September quarter is a seasonally weak period for construction firms such as NCC, as it overlaps with India’s annual monsoon season when progress on most construction projects typically slows.
However, analysts expect project execution to pick up in the second half of the current fiscal year, especially in the fourth quarter, which is more conducive for construction activity.
Hyderabad-based NCC’s medium-term order inflow prospects remain strong due to a state-level development push for more infrastructure projects, including the development of Amaravati city, the capital of Andhra Pradesh state, analysts at Antique Stock Broking said.
Bigger peer and infrastructure giant Larsen & Toubro reported a quarterly profit rise last month, as strong execution of overseas projects outweighed domestic weakness.
PEER COMPARISON
Valuation (next 12 Estimates (next 12 Analysts’ sentiment
months) months)
RIC PE EV/EBITDA Revenue Profit Mean No. of Stock to Div
growth (%) growth (%) rating* analyst price yield
s target** (%)
NCC NULL 6.36 12.09 17.03 Buy 12 0.77 1.07
KNR Constructions 16.92 14.69 5.83 -33.14 Hold 15 0.84 0.14
PNC Infratech 12.61 16.44 16.01 -1.68 Buy 13 0.76 0.21
Ashoka Buildcon 16.99 10.29 6.94 36.86 Buy 8 0.93 NULL
* The mean of analyst ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell
** The ratio of the stock’s last close to analysts’ mean price target; a ratio above 1 means the stock is trading above the PT
JULY-SEPTEMBER STOCK PERFORMANCE
— All data from LSEG
— $1 = 87.8950 Indian rupees
(Reporting by Hritam Mukherjee in Bengaluru; Editing by Ronojoy Mazumdar and Sonia Cheema)
