Will wait and see if lenders pass on rate cut benefit: NCC

Given the recently-acquired balance sheet strength, NCC plans to repay high cost term debt of Rs 600 crore using proceeds of the rights issue.

The RBI's rate cut bodes well for the industry, says NCC executive vice-president YD Murthy, but it is critical to watch how much of it will be passed on by the lenders. If rates are cut to the tune of 100 bps and if it is passed on, then it will add Rs 25 crore to the full year bottomline.

Analysts across the board are putting their faith behind NCC saying the company is best placed to capitalize on the huge infra investment opportunity. Over the last two years, while many EPC companies filed for Corporate Debt restructuring (CDR), NCC managed to improve its working capital situation and brought its debtor days down from 105 days in FY11 to 80 days in FY14.

Given the recently-acquired balance sheet strength, NCC plans to repay high cost term debt of Rs 600 crore using proceeds of the rights issue. Analysts say once this debt is repaid, NCC will have residual standalone debt of Rs 2,200 crore which would be entirely working capital debt and will also help improve credit rating.

Stay tuned for more...

NCC stock price

On January 16, 2015, at 14:14 hrs NCC was quoting at Rs 76.95, down Rs 0.3, or 0.39 percent. The 52-week high of the share was Rs 90.25 and the 52-week low was Rs 13.88.

The company's trailing 12-month (TTM) EPS was at Rs 0.79 per share as per the quarter ended September 2014. The stock's price-to-earnings (P/E) ratio was 97.41. The latest book value of the company is Rs 56.10 per share. At current value, the price-to-book value of the company is 1.37.

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