A handful of companies including NBCC (India) Ltd, SJVN Ltd, NMDC Ltd Ashoka Buildcon and KNR Constructions Ltd recently came out with their quarterly results. Four of them -- Ashoka Buildcon, NBCC, KNR Constructions and NMDC received 'Buy' ratings from analysts; SJVN, on the other hand, received a 'Hold' rating. The five stocks have rallied up to 123 per cent in 2024 so far.
SJVN | Buy | Target price: Rs 133 SJVN reported a 29 per cent jump in revenue and 31 per cent rise in profit after tax in the June quarter, driven by strong generation increase at its hydro power plant. The company has an operational power capacity of 2.5 GW and under construction capacity of 4.8 GW, which it plans to commission in phases over the next three years.
"The incremental addition is led by renewables, on which SJVN expects to generate RoE of 10 per cent. This is lower than the regulated hydro plant RoE of 15 per cent. Due to its aggressive capex plan of Rs 10,000-12,000 crore per annum, we need to watch for leverage. SJVN is planning to fund the capex by securitization and IPO of subsidiary Green Renewable. We resume coverage with Hold rating with SoTP-based target price of Rs 133," Antique Stock Broking said. The catalyst for stock performance is commissioning of Buxar in FY25E and Arun-3 in FY26E, the brokerage said.
NBCC | Buy | Target price: Rs 198 Nuvama said NBCC clocked a revenue of about Rs 2,140 crore in Q1FY25, up 12 per cent YoY. Ebitda margin came in at 4.3 per cent, up 150 bps YoY, which lifted adjusted PAT by 47 per cent YoY to about Rs 100 crore. The management has guided for Rs 13000 crore in revenue and 5.5–6 per cent Ebitda margins for FY25. Order wins remained strong at Rs 19,800 crore in Q1FY25; the company was awarded projects worth Rs 3,700 crore during the quarter.
"Improvement in order intake, execution and margins along with traction in real estate monetisation impel us to increase the target P/E to 50 times from 40 times earlier. Maintain ‘HOLD’ with a target price of Rs 198 from Rs 144, as we roll over the valuation to Q1FY27E," Nuvama said.
KNR Constructions | Buy| Target price: Rs 397 Nirmal Bang Institutional Equities said prospects look bright for KNR Construction with the Union Budget allocating Rs 15,000 crore for the enhancement of Andhra Pradesh's capital city and the Telangana government’s proposal to invest Rs 150 crore over the next five years to revitalise the Musi riverfront.
"We believe that KNR will be in a sweet spot. We have slightly increased our FY25 and FY26 PAT projections by 3.7 per cent and 4 per cent, respectively. We remain positive in the construction/infrastructure sector and maintain our Buy rating on KNR, valuing it at 15 times FY26E EPS and 0.7 times P/B for BOT/HAM projects," it said while suggesting a target price of Rs 397 on the stock.
Ashoka Buildcon | Buy | Target price: Rs 280 HDFC Institutional Equities said Ashoka Buildcon missed its Q1 revenue, Ebitda and adjusted profit estimates by 6.7 per cent, 14.6 per cent and 36.5 per cent, owing to weak margins in legacy projects. Ashoka Buildcon expects to record double-digit Ebitda margin from Q4FY25 on the back of new order execution improving in the revenue mix. The order book as of June 30 stood at Rs 10,350 crore, which was 1.3 times FY24 revenue. This excludes Rs 3,430 crore worth L1 orders. Ashoka Buildcon has guided an order inflow of Rs 12,000 crore for FY25, expecting a robust H2FY25.
Business-wise, Ashoka Buildcon's order book is well-diversified, said HDFC Institutional Equities. "ASBL expects to diversify its portfolio in water segment with a strong upcoming bid pipeline. The company guided FY25 revenue growth guidance of 20 per cent YoY. Given a truncated ordering period and weaker-than-expected NHAI ordering, it expects the bid momentum to restart from H2FY25. Given the stable OB, improving visibility on asset monetisation, and margin expansions on the back of new order execution, we maintain BUY," the brokerage said.
The brokerage suggested a target price of Rs 280 on Ashoka Buildcon while factoring in a higher valuation for HAM assets.
NMDC | Buy | Target price Rs 280 MOFSL said while Q1 revenue for NMDC was in line with its estimates, lower cost led to operating outperformance. NMDC has cut prices in the ongoing quarter due to weak global prices and onset of monsoon, which might keep operating profit under pressure in the coming quarters, MOFSL said.
"With requisite approvals in place, production is likely to ramp up in FY25/ FY26. Major steel manufacturers in India plan to double their capacity by FY30-31E given a robust demand outlook led by the government’s infra push, which will fuel the overall demand for iron ore," it said.
"Besides, With challenges owing to pending EC clearances behind, volume growth is expected to be robust. Despite the recent price cut in 2Q, ASP is expected to improve in 2HFY25. At CMP, NMDC trades at 4.7 times FY26E EV/Ebitda. We marginally lower our FY26 APAT estimates by 5 per cent and retain our Buy rating on NMDC with a revised target price of Rs 280 (6.5x FY26 EV/Ebitda)," it said.