NBCC shares: UP 330% in one year, can this PSU stock rally further?

NBCC recently came out with its quarterly results and analysts said the execution at the civil construction company continued to improve and that its  order book is offering a decent earnings visibility. Asset monetisation holds the key, analysts said.

Also known National Buildings Construction Corporation Limited, NBCC is a government's Navratna Enterprise and is focused on PMC (Project Management Consultancy), EPC (Engineering Procurement & Construction) and RE (Real Estate) segments.

On Tuesday, NBCC shares were up 1.24 per cent at Rs 143.05 on BSE. NBCC (India) said it has been awarded the work order amounting Rs 560 crore from NIT, Sikkim for Construction of permanent campus of NIT Sikkim at dung dung Khamdong, Gangtok, Sikkim The said work order in the normal course of business of the Company.

Earlier on Monday, NBCC said it received orders worth Rs 369 crore in normal course of business.

Arihant Capital Markets said NBCC has been anticipating a significant growth, expecting a substantial inflow of orders within the coming month. NBCC possesses a strong execution capabilities and have significant opportunities in the redevelopment sector that will drive growth in both revenues and profits, the brokerage said.

NBCC shares have 75 per cent in 2024 so far and are up 330 per cent in the last one year. Nuvama Institutional Equities said the order book for NBCC improved sequentially to Rs 55,300 crore and that the management has guided for Rs 10,500–11,000 crore in revenues and 5–5.5 per cent Ebitda margins for FY24.

"Factoring in improved order intake/margins and traction in real estate monetisation, we revise upwards PE multiple to 40 times (25 times earlier). However, 115 per cent run-up in the stock in the last three months leaves little room for upside. Hence, we downgrade the stock from ‘Buy’ to ‘Hold’ with target price of Rs 143 (earlier Rs 76) as we rollover to Q3FY26E," Nuvama said.

While the book-to-bill at 6 times seems robust, nearly 50 per cent of orders pertain to ‘self-revenue generating projects’, wherein the pace of real estate monetisation would determine execution.

NBCC recently monetised Rs 10,000 crore in WTC project and expects to fully sell this project by end-FY24. In the Amrapali project, the company has sold Rs 3,500 crore worth of inventory. In terms of its own real estate sales, NBCC sold Rs 120 crore and plans to sell Rs 50 crore in Q4FY24.

 

 

 

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