Indian infra firm NCCs profit slides on weak project execution

(Reuters) -Indian construction company NCC reported a 5% drop in second-quarter profit on Thursday, hurt by a project slowdown due to monsoon rains.

Consolidated net profit fell to 1.55 billion rupees ($17.63 million) in the quarter ended Sept. 30, from 1.63 billion rupees a year earlier.

Revenue fell to 45.43 billion rupees from 51.96 billion rupees in the previous year.

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The July-September quarter is a seasonally weak period for construction firms like NCC as it coincides with India’s annual monsoon season, when progress on most construction projects typically slows down.

However, analysts expect project implementation to accelerate in the second half of the current fiscal, especially in the fourth quarter, which is more conducive for construction activities.

Antique Stock Broking analysts said medium-term order flow prospects for Hyderabad-based NCC remain strong due to the state-level development push for more infrastructure projects, including the development of Amaravati city, the capital of Andhra Pradesh state.

Larger peer and infrastructure giant Larsen & Toubro reported quarterly profit growth last month as strong execution of projects abroad outweighed weakness at home.

Valuation (next 12 Estimates (next 12 Analyst opinions)

RIC PE EV/EBITDA Revenue Profit Average Number of Stocks to be Divided

growth (%) growth (%) rating* analyst price return

NCC EMPTY 6.36 12.09 17.03 Buy 12 0.77 1.07

KNR İnşaat 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 EMPTY

* Average of standardized analyst ratings based on a scale of Strong Buy, Buy, Hold, Sell and Strong Sell.

** The ratio of the stock’s last close to analysts’ average price target; A ratio above 1 means the stock is trading above PT

JULY-SEPTEMBER SHARE PERFORMANCE

— $1 = 87.8950 Indian rupees

(Reporting by Hritam Mukherjee in Bengaluru; Editing by Ronojoy Mazumdar and Sonia Cheema)