NCC - NCC

📊 NSE: NCC 🏢 Construction 📅 Last Updated: 12/14/2025 10:25

💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue for FY25 grew 6% to INR 22,199.36 Cr. However, Q2 FY26 saw a 12.2% degrowth to INR 4,585 Cr from INR 5,224 Cr YoY, with Buildings and Water segments experiencing significant execution slowdowns.

Geographic Revenue Split

Operations are diversified across India with a policy to restrict exposure to any single state government agency to no more than 25% of the total order book to mitigate regional concentration risk.

Profitability Margins

Net profit margin improved to 3.96% in FY25 from 3.45% in FY24. FY24 margins were moderated to 9% (from 10.06% in FY23) due to a non-cash charge-off of unrealized revenue from the Sembcorp India arbitration settlement.

EBITDA Margin

Consolidated EBITDA margin stood at 8.7% in Q2 FY26. For FY25, the margin was 8.64%, a slight increase from 8.49% in FY24, driven by increased volume of operations despite fixed cost pressures.

Capital Expenditure

Net cash used in investing activities was INR 218.83 Cr in FY25, compared to INR 332.51 Cr in FY24. The company has a planned equity commitment of INR 691 Cr for SPVs to be infused over the next two fiscals.

Credit Rating & Borrowing

CARE reaffirmed 'AA-; Stable' for long-term facilities and 'A1+' for short-term instruments. Borrowing costs are managed through a comfortable debt-equity ratio of 0.20 in FY25, though interest coverage slightly declined to 6.01x from 6.59x.

⚙️ Operational Drivers

Raw Materials

Primary raw materials include steel, cement, bitumen, and aggregates, which are essential for civil construction, transportation, and water infrastructure projects.

Import Sources

Raw materials are primarily sourced domestically within India to support nationwide project locations and minimize forex exposure.

Capacity Expansion

The company's execution capacity is reflected in its order book, which grew to INR 71,957 Cr as of September 30, 2025, up from INR 71,568 Cr at the start of the fiscal year.

Raw Material Costs

Raw material costs are a significant portion of project expenses; the company utilizes escalation clauses in contracts to mitigate the impact of price fluctuations on its 9.09% operating profit margin.

Manufacturing Efficiency

Efficiency is measured by project execution speed; however, Q2 FY26 saw a turnover decline to INR 4,585 Cr due to extended monsoons and execution challenges.

Logistics & Distribution

Distribution costs are integrated into project execution; trade receivables increased 11% to INR 3,097.72 Cr in FY25, reflecting the logistical and financial strain of elongated payment cycles.

📈 Strategic Growth

Expected Growth Rate

35%

Growth Strategy

Growth is targeted through a massive order book of INR 71,957 Cr and a focus on high-demand segments like Buildings (31%) and Water/Electrical (23%). The company is also seeking strategic partners for SPVs to offload equity infusion liabilities and secure strategic premiums.

Products & Services

Civil construction services for residential and commercial buildings, water pipelines (36,525+ km), irrigation systems (350,000+ acres), roads, railways, and electrical transmission grids.

Brand Portfolio

NCC Limited, NCC Urban Infrastructure, NCC Infrastructure Holdings.

New Products/Services

Expansion into smart metering projects and hybrid annuity model (HAM) projects in the transportation and water sectors.

Market Expansion

Pan-India expansion with a focus on rural infrastructure, including the electrification of over 35,000 villages and large-scale water distribution networks.

Market Share & Ranking

NCC is a leading tier-1 construction player in India with a 47-year legacy and a consolidated turnover exceeding INR 22,000 Cr.

Strategic Alliances

Onboarding strategic partners for infrastructure SPVs to reduce the INR 691 Cr equity infusion requirement and improve project-level financial closure.

🌍 External Factors

Industry Trends

The industry is shifting toward larger, integrated infrastructure projects and ESG-compliant construction. NCC is positioning itself by tracking sustainability indicators and targeting a 35% historical CAGR.

Competitive Landscape

Competes with major civil construction firms like L&T and KEC International in a highly competitive, tender-based market environment.

Competitive Moat

Moat is built on a 47-year track record, a massive INR 71,957 Cr order book, and a strong credit rating (AA-) which provides a competitive advantage in bidding for large-scale government tenders.

Macro Economic Sensitivity

Highly sensitive to government infrastructure spending and macroeconomic conditions; challenging environments recently forced a withdrawal of financial guidance.

Consumer Behavior

Not applicable as the company primarily serves government and institutional clients (B2G/B2B).

Geopolitical Risks

Minimal direct impact as operations are primarily domestic; however, global supply chain dynamics can influence the cost of imported machinery and specialized components.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to state government tender norms, environmental clearances, and safety standards; 2,370 health and safety awareness trainings were conducted in FY23.

Environmental Compliance

ESG risks are considered credit neutral; the company integrates data collection and sustainability tracking across sites to meet evolving environmental priorities.

Legal Contingencies

The company faced a significant arbitration settlement with Sembcorp India, resulting in a non-cash charge-off of unrealized revenue that moderated FY24 margins to 9%.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the 'elongated payment cycles' from state agencies, which led to the withdrawal of FY26 guidance and could impact liquidity if cash flow from operations (INR 815.78 Cr in FY25) continues to decline.