Posted on February 7, 2025, by Niftynews
Shares of NCC Limited, one of India’s leading construction companies, saw a sharp fall on February 7, 2025, as the company reported mixed Q3 results for fiscal 2025. The NCC share price dropped by 14.5%, hitting an 11-month low of ₹203 per share. The decline came after the company reported a modest turnover increase but a significant drop in net profit during the third quarter.
Q3 Performance: Mixed Results Raise Concerns
On a consolidated basis, NCC Limited reported a turnover of ₹5,382.86 crore for the third quarter of the current fiscal year, showing a slight increase compared to ₹5,287.74 crore for the same period last year. Despite the increase in turnover, the company faced challenges on the profitability front, as net profit decreased to ₹193.18 crore, down from ₹220.55 crore in the corresponding period of the previous year.
The decline in net profit and EBITDA (earnings before interest, taxes, depreciation, and amortization) raised concerns among investors, leading to the significant drop in the NCC share price. The company recorded EBITDA of ₹540.90 crore for the quarter, compared to ₹505.41 crore in the same period last year. The basic and diluted EPS for Q3 stood at ₹3.08, compared to ₹3.51 in the previous year’s third quarter.
While the Q3 turnover showed growth, the company’s EBITDA and profitability metrics were somewhat disappointing, impacting investor confidence and leading to the sharp fall in NCC share price.
Nine-Month Performance: Some Positive Aspects
For the nine-month period ending December 31, 2024, NCC Limited recorded a turnover of ₹16,165.55 crore, which marked a 13% increase compared to ₹14,440.86 crore in the corresponding period of the previous fiscal year. The company’s EBITDA for the nine months was ₹1,361.76 crore, and net profit stood at ₹566.06 crore, compared to ₹1,218.36 crore and ₹471.53 crore, respectively, for the same period last year.
The basic and diluted EPS for the nine-month period stood at ₹9.02, compared to ₹7.51 in the same period last year, which is a positive sign. Despite the decline in Q3 earnings, the overall performance for the nine months was better compared to the previous year, although the quarterly dip was concerning for investors.
Significant Drop in Stock Price
The steep fall in NCC share price on February 7 was largely attributed to the Q3 results, which failed to meet analysts’ expectations. Shares of NCC have been on a downward trajectory over the past several months, falling from ₹364.50 to ₹208 in just seven months—a 43% decline. However, the stock has still delivered an impressive 320% return over the last five years, highlighting its long-term growth potential despite recent volatility.
Infrastructure Sector Outlook
NCC Limited is one of India’s largest and most diversified infrastructure conglomerates, with operations spanning various sectors such as building and housing, roads, water and environment, irrigation, metals, mining, and railways. The company’s diversification has provided resilience in the face of challenges in certain segments.
The Indian government’s continued emphasis on infrastructure spending is expected to support the long-term growth prospects for NCC Limited. The company is well-positioned to benefit from the ongoing infrastructure boom in India, driven by strong government investments in transportation, urban development, and industrial projects. However, the immediate dip in Q3 performance has raised some questions about the company’s short-term execution capabilities.
Future Prospects and Challenges
Despite the short-term setback, NCC Limited’s diversified portfolio and strong market position in the infrastructure sector provide a solid foundation for future growth. The company’s strong order book, along with government-backed projects, could drive performance in the coming quarters. However, investors will be closely monitoring how the company addresses issues related to profitability and cost management, especially as it deals with challenges in certain segments like water and environment and metals.
Conclusion: What Should Investors Do?
The sharp fall in NCC share price following its Q3 results indicates investor concerns about the company’s short-term profitability and ability to maintain growth momentum. However, given the company’s strong order pipeline, diversification across multiple sectors, and government-backed projects, NCC Limited remains a key player in India’s infrastructure sector.
Investors looking at NCC shares as a long-term play may consider waiting for a potential rebound in stock prices, especially if the company can improve its EBITDA margins and profitability in the coming quarters. Those with a short-term investment horizon, however, may want to exercise caution given the recent volatility in the stock price.
