NCC - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 3.4
| Stock Code | NCC | Market Cap | 9,616 Cr. | Current Price | 153 ₹ | High / Low | 248 ₹ |
| Stock P/E | 13.4 | Book Value | 121 ₹ | Dividend Yield | 1.44 % | ROCE | 20.1 % |
| ROE | 10.7 % | Face Value | 2.00 ₹ | DMA 50 | 159 ₹ | DMA 200 | 195 ₹ |
| Chg in FII Hold | -1.38 % | Chg in DII Hold | -1.35 % | PAT Qtr | 101 Cr. | PAT Prev Qtr | 190 Cr. |
| RSI | 52.3 | MACD | -3.29 | Volume | 30,05,997 | Avg Vol 1Wk | 28,40,128 |
| Low price | 138 ₹ | High price | 248 ₹ | PEG Ratio | 0.50 | Debt to equity | 0.28 |
| 52w Index | 13.5 % | Qtr Profit Var | -37.1 % | EPS | 11.0 ₹ | Industry PE | 17.1 |
📊 Analysis: NCC shows moderate fundamentals with ROCE at 20.1% and ROE at 10.7%, supported by a manageable debt-to-equity ratio of 0.28. The stock trades at a reasonable valuation with a P/E of 13.4 compared to the industry average of 17.1, making it slightly undervalued. Dividend yield at 1.44% provides decent income support. However, quarterly profit has declined sharply (PAT 101 Cr. vs 190 Cr., -37.1%), raising concerns about earnings stability. Technical indicators (RSI ~52.3, MACD negative) suggest neutral to weak momentum, with price below both 50 DMA (159 ₹) and 200 DMA (195 ₹). PEG ratio of 0.50 indicates attractive valuation relative to growth potential, but earnings volatility is a risk.
💰 Ideal Entry Zone: A favorable entry would be in the range of 140 ₹ – 150 ₹, closer to support levels and below current price, offering better margin of safety.
📈 Exit / Holding Strategy: If already holding, maintain a medium-term horizon (2–3 years) given moderate ROE/ROCE and fair valuations. Consider partial profit booking near 200–220 ₹ if momentum improves. Exit strategy should be considered if earnings continue to decline or if institutional selling persists. Long-term investors may continue holding if profitability stabilizes and growth projects materialize.
✅ Positive
- Reasonable P/E (13.4) compared to industry average (17.1).
- ROCE (20.1%) and ROE (10.7%) show moderate efficiency.
- Debt-to-equity ratio (0.28) indicates manageable leverage.
- Dividend yield (1.44%) provides income support.
⚠️ Limitation
- Quarterly PAT decline (-37.1%) raises earnings concerns.
- Stock trading below DMA levels indicates weak technical trend.
- Institutional selling pressure (FII -1.38%, DII -1.35%).
📉 Company Negative News
- Sharp decline in quarterly profits.
- Reduced institutional confidence with both FII and DII holdings decreasing.
📈 Company Positive News
- PEG ratio (0.50) suggests attractive valuation relative to growth.
- Dividend yield at 1.44% supports investor returns.
- Book value (121 ₹) provides strong asset backing compared to current price.
🏭 Industry
- Industry P/E at 17.1 indicates sector is moderately valued.
- Construction and infrastructure sector expected to benefit from government spending and urban development initiatives.
🔎 Conclusion
NCC is a moderately strong company with fair valuations, decent efficiency metrics, and manageable debt. However, earnings volatility and institutional selling are concerns. Ideal entry is below current price (~140–150 ₹). Existing holders should maintain positions with a 2–3 year horizon, booking profits near highs if momentum improves. Long-term investors should monitor earnings stability before committing further capital.