In Outlook Business’ third edition of The Outperformers, these are the companies that have managed to beat the market over a five-year period, creating significant value for their shareholders.
A Navratna public sector entity, NBCC India has emerged as a strong leader in the construction sector by following an asset-light model. The company subcontracts construction work to other companies and merely monitors and conceptualises the project.
Besides being nimble-footed, the infra company is in top position to bag government projects because of its Public Works Organisation status. The dual advantage has helped the company scale new heights. It has been one of the major beneficiaries of the government’s focus on the infrastructure sector with the company’s order book expanding at 39% CAGR to Rs.800 billion over the past five years. Even in FY19, the company managed to bag orders worth Rs.125 billion and has guided order inflows of Rs.150 billion in FY20. While a strong order book provides high revenue visibility, the company has huge opportunity to tap into redevelopment of old government colonies in Rajasthan, Delhi and Odisha. However, delay in key redevelopment projects, uncertainty over Jaypee Infra deal and government’s push to take over sick infra companies pose risk to the company’s performance. Despite the headwind, execution of orders worth Rs.320 billion is currently underway, owing to which analysts expect revenue to grow at 27% CAGR to Rs.15,972 crore in FY19-21E. A stellar performance in the past has made the company’s stock an outperformer, delivering returns of 44.50% over the past five years. And despite the rally in the stock price, it still trades at an inexpensive valuation of 9.8x EV/Ebitda, making it a compelling bet.
22. Solar Industries