NCC plummets almost 20 per cent

The stock of Infrastructure developer, NCC plummets nearly 19 per cent to touch low of Rs. 95.20 apiece on Friday, in the last trading session in the month of May 2019.

On May 30, 2019, the YS Jaganmohan Reddy took oath as the new CM of Andhra Pradesh and on the same day, the new government took the decision to cancel all the projects that were sanctioned before April 2019. However, this decision would be applicable only to projects where work is yet to begin. The move will adversely affect the order book of NCC, which has won several orders in the state.

NCC’s order book as on FY19 stood strong at Rs. 41,200 crore, which translate to a book-to-bill of nearly 3x on FY19 revenue. Out of these orders, nearly 30 per cent are from the state of Andhra Pradesh, which is a cause of concern for the shareholders of the company.

The company’s current order book is dominated by building and housing division, which contribute around 39 per cent to the overall order book, followed by water, environment & railways and road division which account for 23 per cent and 21 per cent, respectively

On Friday, the stock of NCC which opened gap down at Rs. 109 per share was down by 7 per cent as against its previous close of Rs. 116.90. Later, the stock tumbled nearly 19 per cent to an intraday low. Before Friday’s sharp decline, the stock of NCC had delivered a stellar return of 32 per cent in 2019.