52-week flop: Nagarjuna Construction

The stock of Nagarjuna Construction (NCC) declined 57 per cent over the last one year troubled by slower pace of execution and delays in release of payment by clients. While infrastructure companies in general have had a lacklustre FY-11 with weak order flows, few such as Nagarjuna Construction were dented further by issues specific to the company.

For instance it suffered delays in payments in certain water-related projects in Andhra Pradesh and Madhya Pradesh.

For the full year ending March, the company's sales grew by a mere 6.1 per cent to Rs 5,067 crore, while profits fell 18 per cent to Rs 163 crore.

The company estimated that it may have lost well over Rs 600 crore of revenue as a result of adverse weather conditions, delayed payments and delay in clearances. Provision for losses on certain road projects also depressed EBITDA margins.

The company did not do too well on the order front as well. Order inflows of Rs 6,600 crore for FY-11 was below the company's earlier guidance of Rs 10,000 crore.

Though the order book of Rs 16,200 crore is at a decent three times revenues for the latest fiscal, rising debt-equity — 1.04 in FY-11 from 0.7 times a year ago, is a cause for concern.

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