NBCC shares can rise over 42%, says Elara Capital with a 'buy' recommendation

Brokerage firm Elara Capital on Tuesday, July 8, initiated coverage on NBCC (India) Ltd. with a "buy" rating and a target price of ₹165 per share, indicating a potential upside of 42.3% from its previous close.

NBCC is a preferred CPSE for Elara due to its expertise in redevelopment of government land, reviving stuck private realty projects and building & hospitals.

The brokerage said NBCC's recent fourth quarter earnings outperformed with a 47% compound annual growth rate (CAGR) in comparison with the growth seen in the PSU engineering consultancy industry between financial year 2020-2025, which stood at 8%.

NBCC is also set for strong earnings growth, from 3x growth in order inflows to ₹69,100 crore in the financial year 2025, which is the highest ever, according to the brokerage.

It expects NBCC's revenue and earnings to grow at a CAGR of 24% and 23% over financial year 2025-2028.

As per Elara Capital, NBCC's key strengths include that it is asset-light model, has stable margin, is debt-free with lean working capital cycle and superior return ratios of over 20%.

NBCC's fourth quarter net profit increased 29.4% to ₹176 crore from ₹136 crore in the year-ago period.

Its revenue increased 16.2% to ₹4,642.5 crore from ₹3,996.3 crore in the previous year.

The company's earnings before interest taxes depreciation and amortisation (EBITDA) increased 19.3% to ₹290 crore in comparison to ₹243.2 crore in the previous fiscal. Its EBITDA margin expanded slightly to 6.25% from 6.09% in the year-ago period.

NBCC is now covered by four analysts, of which three of them have a "buy" rating and one has a "sell" recommendation.

NBCC shares were trading 0.3% lower at ₹115.54 apiece at 11.55 am on Tuesday, July 8. The stock has gained 24.28% this year, so far.

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