Posted on March 20, 2025, by Niftynews
The NCC share price surged by 5% on Thursday, March 20, 2025, following the company’s announcement of securing a substantial infrastructure development contract. The contract, awarded by the Andhra Pradesh Capital Region Development Authority (APCRDA), is valued at ₹2,129.60 crore (excluding GST) and will focus on the development of essential infrastructure in Amaravati, the capital city of Andhra Pradesh. This order has positively impacted the NCC share price, contributing to the stock’s significant price movement on the day.
Key Details of the Amaravati Infrastructure Project
The contract awarded to NCC Limited is categorized as a “Major Order” and will be executed over a period of five years. The first three years will be dedicated to construction, while the final two years will be reserved for the defect liability period (DLP). Under this project, NCC will undertake the construction of vital infrastructure elements in the Zone-12 villages of Amaravati. The scope of work includes the construction of roads, drainage systems, water supply networks, sewage systems, utility ducts for power and information and communication technology (ICT), reuse water lines, and avenue plantation. This expansive infrastructure development is expected to enhance the city’s connectivity and urban planning, further contributing to the demand for NCC’s services.
The awarding of this ₹2,129.60 crore contract signals a positive step for NCC Limited, as it expands its footprint in the growing Amaravati region. The substantial scale of the contract has not only boosted NCC’s reputation but also positively impacted the NCC share price, which has risen sharply in response to the announcement.
NCC’s Recent Financial Performance and Growth Prospects
Despite the recent rally in the NCC share price, it’s important to take a closer look at the company’s financial performance. For the third quarter of the fiscal year 2025 (Q3FY25), NCC Limited reported a 12.5% year-on-year (YoY) decline in net profit, totaling ₹193.2 crore. This decline in profit was partly due to an increase in operational costs and a slight decrease in margins. However, the company’s revenue from operations saw a slight uptick, rising by 1.6% to ₹5,344.5 crore compared to ₹5,260 crore during the same period last year.
At the operating level, EBITDA fell by 16.6%, from ₹504.4 crore in Q3FY24 to ₹420.9 crore in Q3FY25, reflecting some challenges in terms of profitability. The company’s EBITDA margin also decreased slightly, falling from 6.2% to 7%. Despite these short-term challenges, NCC’s ability to secure large contracts, such as the Amaravati infrastructure project, positions the company for a strong recovery in the coming quarters.
The Impact of the Amaravati Contract on NCC Share Price
The Amaravati infrastructure contract is expected to significantly benefit NCC in the coming years. As the company undertakes these large-scale infrastructure projects, it will likely see an increase in demand for its services, improving both its order book and future revenue streams. The five-year timeline for the contract provides a long-term revenue source, which should help support NCC’s growth trajectory and potentially improve its profitability moving forward.
Moreover, this major order win signals to the market that NCC has the capabilities to execute large-scale projects, further strengthening investor confidence. The NCC share price has already reacted positively to this news, rising by 5% on the day of the announcement, with further growth expected as more details about the execution of the project unfold.
Outlook for NCC Share Price: Buy, Sell, or Hold?
With the recent surge in NCC share price, investors may be wondering whether to buy, sell, or hold their shares. Given the company’s solid order book and its potential to benefit from large infrastructure projects like the Amaravati development, there could be significant upside potential in the long term.
- Buy: Investors looking for growth in the infrastructure sector may find NCC shares attractive at current levels, especially considering the company’s strong pipeline of projects.
- Sell: Those who have already seen gains from the recent price increase might consider locking in profits by selling their shares.
- Hold: For existing investors, holding onto NCC shares may be a sound strategy, particularly if they believe in the company’s long-term growth potential.
Conclusion
The recent 5% surge in NCC share price, fueled by the Amaravati infrastructure contract win, has highlighted the company’s strong position in India’s growing infrastructure sector. While NCC faces some challenges in terms of profitability in the short term, its long-term prospects are bolstered by major contracts like the one in Amaravati. As the company executes on these projects, NCC’s share price could see further positive movement, making it an appealing option for investors interested in the infrastructure sector.
