As India’s economic growth sagged by 6.1 per cent in the fourth quarter of 2016-17 due to demonetisation and other factors, the sectors that borne the heavy brunt were construction, real estate and financial services. While most of the construction sectors were reeling under the economic slowdown, NCC (formerly Nagarjuna Construction Corporation) has been one of the fastest growing firms which outperformed its industry.
Spearheaded by A.A.V. Ranga Raju, NCC is now a billion-dollar company, which has diversified itself by establishing multiple divisions including Housing, Roads, Water and Environment, Electrical and Irrigation NCC also has two subsidiaries: NCC Infra and NCC Urban. Over the years, the Hyderabad-based company has built numerous iconic projects across the country.
Raju is widely known as someone who visualises infrastructure as the future growth engine for any developing nation. In a message on the company’s official site, he stated, “We have never hesitated to go the extra mile in creating strong and incremental value for our stakeholders without cost overruns.”
“During FY 2017-18, NCC has done fairly well as compared to their peers,” says Vijay Agrawal, Executive Director, Equirus Capital.
“They were able to secure new orders worth more than Rs 115 billion and also Mining MDO order. The company has sharpened its focus on EPC business and has moved out of asset heavy business by selling their power plant and Road assets. This has helped company to achieve higher ebidta margins (8.8 per cent) and a lower debt equity ratio of 0.6x. The RoE has improved in past few years to 6.6 per cent,” says Agarwal.
NCC has recently won orders for Metro projects which is a fast growing segment. This helps in revenue risk mitigation.
“Mr Raju is a veteran in the construction industry and was instrumental for diversification of EPC business and identification of new growth areas like Metro,” adds Agarwal. “Raju has a good financial acumen and has raised funds in anticipation of growth opportunity. Under his leadership, NCC has achieved turnover of more than Rs 8,000 crore and is one of top 5 EPC players in India,” he adds.
NCC’s loans and advances to group companies were also reduced to Rs 558 crore in FY17 as compared to Rs 1,122 crore in FY16. Its debt collection period continues to be stable at about 75 days. Further, it has also garnered fresh orders of Rs 9,226 crore and order book of the company stood at Rs 18,088 crore at the end of the financial year 2017-18.
“While we added orders worth Rs 6,000 crore in the first quarter, we expect to see an addition of new orders worth around Rs 10,000 crore in FY18. We are confident of achieving a top line growth of 10 per cent in FY 18... we are actively considering unwinding our exposure to the real estate sector...,” Raju stated while addressing the shareholders in 2017.