Master Pick - NCC Limited For Target Rs.100 - Religare Broking
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NCC Limited
* NCC Limited is the second largest listed construction company in India in terms of revenue. It has a well diversified order book across sectors such as buildings & housing, roads, water & environment, irrigation, electrical, metals, mining and railways. Further, It has pan India presence with offices at Mumbai, Bangalore, Delhi, Kolkata, Cochin, Chennai, Lucknow, etc.
* NCC’s Q2FY22 consolidated revenue grew 51% YoY to Rs 2,581.4cr led by strong order book of Rs ~39,000cr . Margins were impacted due to an increase in commodity prices but it is expected to stabilize from Q3FY22 onwards. Its net profit increased by 76.3% to Rs 113.9cr.
* Going forward, the management expects order book to remain strong in H2FY22 as compared to H1FY22, largely driven by government focus on infrastructure and pick-up in construction activity.
Technical Outlook
* NCC has had a history of volatile price swings since listing. The initial ten years were a roller coaster ride and it finally established a trend in early 2004, followed by a vertical run for the next four years.
* With the beginning of the bear trend in 2008, it also slipped sharply from its record high i.e. 196 levels and made a low around 17 levels in March 2009. Though it has made several attempts to reclaim its record high afterward but couldn’t hold above the resistance zone of 110 levels.
* It has been consolidating in a broader range of 70-100 zone for the last nine months and currently seeing a rebound after retesting the lower band of the same. The chart pattern combined with the positioning of the strong support at 70 levels is pointing towards a gradual up move from hereon. We thus advise accumulating in the range of 76-80 with the close below stop loss of 68 for the target of 100.
Technical Chart
Buy NCC Limited CMP 80.05 Accumulation Range 76-80 Stop Loss 68 Target 100 Time Horizon 2-3 Months
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