Following the announcement of its Q3FY25 results, which showed a drop in net profit, NCC Ltd. shares witnessed a massive drop. For the quarter ended December 31, 2024, the infrastructure company's net profit fell 12.5% year-on-year (YoY) to ₹193.2 crore. This poor financial performance and updated growth estimates resulted in a sharp decline in the company's stock price. Concerns about short-term execution issues and margin pressures have also prompted several analysts to revise their ratings and targets for NCC.
Read more: SBI Q3 Results 2025
NCC's Financial Performance in Q3FY25
NCC Limited reported a net profit of Rs 193.2 crore in Q3FY25, down 12.5% compared to the previous fiscal. The company's net profit was Rs 220.7 crore in the same quarter last fiscal. The company's operating revenue grew 1.6% to Rs 5,344.5 crore from Rs 5,260 crore last year, but this profit was insufficient to counter the decline in profits.
In terms of operations, NCC's EBITDA declined from Rs 504.4 crore in Q3FY25 to Rs 420.9 crore in Q3FY25, a decrease of 16.6%. Moreover, the company's EBITDA margin declined to 7.9% from 9.6% in the same period last fiscal. The company's basic and diluted EPS for the quarter was ₹3.08, compared to ₹3.51 in the same quarter last year.
NCC recorded a turnover of ₹16,165.55 crore including other income for the nine months ended December 31, 2024, as against ₹14,440.86 crore during the same period last year. The company's EBITDA for the nine-month period stood at ₹1,361.76 crore, while its net profit attributable to shareholders stood at ₹566.06 crore, as against ₹1,218.36 crore and ₹471.53 crore, respectively, during the same periods last year.
Market Reaction
The market reacted negatively to the publication of Q3FY25 earnings. After opening at ₹221.55, NCC share price declined sharply on February 7, 2025, hitting a 10% lower circuit at ₹213.75. The stock declined 14.46% during the entire trading day on the NSE and closed at ₹203.20 per share. On the BSE, NCC Ltd. shares closed at ₹237.60, down ₹2.40 or 1.00%. Investors' concerns about the company's profitability and future growth prospects were reflected in the sharp fall.
Revised Guidance and Analyst Downgrades
NCC's management updated its growth guidance for the full fiscal year, which further fuelled unfavourable sentiment. The firm revised its margin projection to 9.25% from 9.5% to 10% and also lowered its sales growth guidance to 5% from 15%. The target price for NCC shares was also reduced by 26% by Nuvama Institutional Equities. Taking into account poor execution and margins, JM Financial lowered its FY25, FY26 and FY27 earnings per share (EPS) estimates for NCC by 20%, 13% and 11%, respectively, in response to the updated guidance and Q3 results. Additionally, the firm lowered its price estimate on NCC to ₹330 from ₹365.
Analysts' Views
Of the 14 analysts covering NCC as of February 7, 2025, nine have given the company a "buy" rating, two have suggested "hold", and three have indicated "sell". The stock is expected to rise 44.3% to ₹303.6, the average 12-month analyst target price. HDFC Institutional Equities pointed out that the margin trend will need to be monitored due to competitive pressure. Despite the recent decline, some analysts are cautiously optimistic about NCC's long-term prospects, estimating that the business will meet its forecasted order inflow of ₹20,000-22,000 crore for FY25.
Keep following 5 Dariya News for more news and articles.