NCC Q1 execution, JJM recovery and Rs 7,13,000 million order book support growth

Investment View and Valuation

In its August 08, 2026 Q1FY27 result update on NCC, Prabhudas Lilladher retained its BUY rating and unchanged target price of Rs 195, valued at 15 times FY28E EPS. The positive view is supported by better-than-expected execution, a large executable order book, FY27 revenue-growth guidance, expected margin improvement and improving Jal Jeevan Mission (JJM) collections.

Q1FY27 Financial Performance

NCC reported standalone Q1FY27 revenue of Rs 49,115 million, up 12.2% year on year and 6.8% above Prabhudas Lilladher’s estimate of Rs 45,971 million. Revenue was also around 5% above both the broker’s and consensus expectations, driven by improved execution across segments.

Reported PAT was affected by higher depreciation, interest costs and an effective tax rate of 26.1%, compared with 21% a year earlier.

Order Book and Execution Visibility

NCC’s consolidated order book stood at Rs 8,12,000 million at June-end FY27, equivalent to a 3.5 times book-to-bill ratio. The standalone order book was Rs 7,13,000 million, or around four times trailing-twelve-month revenue. Management stated that the reported order book includes only executable projects, with slow-moving or non-moving contracts removed.

Fresh orders in Q1FY27 were Rs 38,900 million, taking cumulative order inflows to Rs 45,400 million including July awards.

FY27 Guidance and Key Execution Dependencies

Management reiterated FY27 guidance for order inflows of Rs 2,20,000 million to Rs 2,50,000 million, revenue growth of 8% to 10% and EBITDA margin of 8.5% to 9.0%. This follows a 9% revenue decline in FY26 and FY26 EBITDA margin of 8.3%.

Management maintained FY27 capex guidance of Rs 5,000 million, of which Rs 1,700 million had been spent in Q1FY27, mainly on equipment. The guidance remains cautious because execution and revenue visibility depend on government fund releases, project approvals, land availability and right-of-way clearances.

JJM Collections and Working Capital

JJM payment normalisation is an important working-capital and execution catalyst. NCC collected Rs 6,100 million from JJM projects in Q1FY27, including Rs 1,100 million from Uttar Pradesh, followed by a further Rs 4,300 million in July.

Management expects the collection momentum to support substantial completion of the remaining Rs 58,800 million JJM order book and collection of Rs 28,000 million in receivables. Trade receivable days improved to 68 from 73, while working-capital days improved to 95 from 97 at March-end. However, unbilled revenue increased to Rs 74,100 million, or 38% of annualised revenue, mainly because of milestone-based billing on newer contracts.

Debt, Smart-Meter Projects and Capital Requirements

Standalone debt rose to Rs 24,100 million in Q1FY27, largely because of smart-meter project funding and capex. Management expects debt to be broadly stable or decline modestly by FY27-end if collections continue to improve. The medium-term debt trajectory will depend on the share of asset-backed PPP, BOT and HAM projects secured.

No additional equity is required for smart-meter projects after nearly Rs 4,600 million of equity investment. Around 45% of the targeted 7 million to 8 million meters had been installed, with all three projects expected to complete by March 2027. Management targets an 18% IRR on total capital for these projects.

Broker Estimate Revisions

Following the results, Prabhudas Lilladher reduced FY27E and FY28E sales estimates by 1.3% and 2.2%, respectively. It raised FY27E EBITDA by 3.0% and FY27E EPS by 5.6%, while leaving its FY28E EBITDA and EPS broadly unchanged.