NCC share price has more than halved investor wealth in last three months. Construction firm NCC Ltd stock crashed in May this year after some of the projects it was involved in Andhra Pradesh got cancelled. The newly-formed YS Jaganmohan Reddy government scrapped projects sanctioned by Chandrababu Naidu-led TDP government after coming to power earlier this year.
Hours after Jagan Mohan Reddy took over the reins of Andhra Pradesh on May 30, the state government in a letter to all departments said that works sanctioned prior to April 1, 2019 but not grounded (not commenced) would be cancelled.
Hyderabad-based NCC too was executing some of these projects. In fact, the firm on May 31 said, "We understand that the new government is considering to cancel work orders issued prior to April 1 but not grounded. If this were to happen, work orders approximately worth Rs 6,100 crore issued to our company are likely to be cancelled." The company had said it did not receive any communication from the government on the issue. Reacting to the negative development, the firm's share price ended 16.33% or 19 points lower at 97.85 on May 31.
Since then, the small cap share has fallen from Rs 116.95 on May 30, 2019 to Rs 54.90 today logging a loss of 53.05% or Rs 62.05 on BSE. An investment of Rs 1 lakh in NCC Ltd share on May 30, 2019 would have decreased to Rs 46,076 today. Investors in the construction firm have lost Rs 3,727.01 crore in last three months. The stock closed with market capitalisation of Rs 3,297.55 crore on Friday.
On May 30, 2019, market capitalisation of the stock stood at Rs 7,024.56 crore. NCC share price has lost 44.12% during the last one year and fallen 37.68% since the beginning of this year. Seven of 15 brokerages rate the stock "buy", six 'outperform', one "hold" and one "underperform", according to analysts' recommendations tracked by Reuters.
The stoppage of work in Andhra Pradesh took a toll on the firm's financial performance too in the first quarter of current fiscal.
NCC reported a 21.55% fall in net profit at Rs 81.32 crore for the June quarter as against a profit of Rs 103.67 crore during the corresponding quarter last year on a standalone basis.The Hyderabad-based construction firm clocked a turnover of Rs 2,212.70 crore in the first quarter of current fiscal as against Rs 2,389.14 crore in the corresponding quarter of the previous year, a fall of 7%.