NCC Ltd: Order Book Strength Cushions Near-Term Execution Pressure.

~Sumon Mukhopadhyay.

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Introduction:

NCC Ltd (Rs.160.42) is a leading Indian infrastructure and construction company with operations spanning buildings, transportation, water & irrigation, railways, mining, and electrical projects. The company’s performance is closely linked to project execution cycles and government-led capital expenditure, making its order book strength a key valuation driver.

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Q2FY26 Results (Quarter Ended 30 September 2025):

Financial Performance:

• Revenue: Approximately ₹4,543–₹4,585 crore, reflecting a decline of about 12% on a year-on-year and sequential basis.
• Net Profit: Around ₹155–₹167 crore, lower compared to the previous year and quarter.
• EPS: About ₹2.46 per share.
• Margins: Operating and net profit margins saw modest compression, largely due to slower execution and seasonal factors.

Order Book Position:

• Total order book: ₹71,957 crore, up nearly 37% year-on-year.
• New orders received: Around ₹6,223 crore during the quarter.
• The order book remains well diversified across buildings, transportation, water & railways, electrical & T&D, irrigation, and mining.

Key Takeaways (Q2):

• Revenue moderation was impacted by monsoon-related execution delays.
• Strong order inflows continue to provide medium-term revenue visibility.
• The company withdrew its FY26 guidance, citing execution challenges and cash-cycle pressures.

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Q1FY26 Results (Quarter Ended 30 June 2025):

Financial Performance:

• Revenue: Approximately ₹5,179–₹5,208 crore, marginally lower year-on-year.
• Net Profit: About ₹192 crore, showing a slight decline compared with earlier periods.
• EBITDA Margin: Around 9% (standalone), indicating stable core operating efficiency at the start of the fiscal year.

Order Book Snapshot:

• Order book at quarter end: ₹70,087 crore.
• New orders booked: Around ₹3,658 crore during the quarter.

Highlights:

• Order inflows in Q1 reflected continued client confidence.
• Revenue softness was limited, with execution momentum expected to pick up post-monsoon.

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Q1 Vs Q2 FY26: A Sequential View:

Sequentially, Q2 saw lower revenues and profits compared to Q1, primarily due to seasonal execution challenges. However, the order book expanded further in Q2, strengthening long-term visibility despite near-term pressure on earnings.

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Outlook and Order Book Visibility:

NCC’s large and diversified order book provides strong revenue visibility over the next 12–24 months. While execution delays and working-capital challenges may impact short-term performance, the robust project pipeline positions the company well for recovery as execution normalises.

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Conclusion:

NCC Ltd’s FY26 performance reflects a mix of short-term execution headwinds and long-term structural strength:

• Earnings in Q1 and Q2 FY26 were impacted by execution slowdowns and margin pressure.
• A strong and expanding order book of nearly ₹72,000 crore underpins medium-term growth prospects.
• The withdrawal of guidance highlights near-term uncertainty, but not a deterioration in demand.

In summary, NCC remains an order-book-driven infrastructure player, where future performance will depend more on execution efficiency and cash-flow discipline than on fresh order wins alone.