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NBCC IPO opens today: Looks attractive


NBCC IPO opens today: Looks attractive
The Government owned National Building Construction Corporation (NBCC) IPO opens today for subscription. The Government of India is selling 1.2 crore shares in the company at a price band of Rs 90 to Rs 106 aggregating Rs 108 crore to Rs 127 crore.

NBCC operates through three divisions. These include project management consultancy, power projects and real estate. It is a zero debt company, which means that it does not have any borrowings, which is a welcome relief especially since major real estate and infrastructure players are saddled with debt.


Another major advantage for NBCC is that it gets land from the government which it develops. This augurs well for the company, especially since land is a scarce resource and the price is ever rising.

Analysts believe that the pricing if one considers the upper price band of Rs 108 is attractive, if one compares the price to earnings multiple of larger players. In fact, players like DLF and Unitech are traded at very rich P/E multiples and have staggering debts on their books.

Hence, a debt free real estate player like NBCC looks far attractive even at the upper price band. The government's thrust on infrastructure should also augur well for the company to sustain order flows.

However, one of the concerns for the company remains its poor margins, which could see some long term investors staying away.

Read more about: ipo nbcc unitech
Story first published: Thursday, March 22, 2012, 11:29 [IST]
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