Navratna PSU giant, NBCC (India) is a multibagger of 2024, with gains of nearly 118% YTD. The stock has been among the top performing PSUs of the current year so far. At the latest, brokerage Geojit recommended to HOLD the stock with a target price of Rs 189 for the near term. The reason why Geojit suggests HOLD is because NBCC is rich in valuation, and there is a limit to upside potential.
NBCC Share Price:
The stock price ended at Rs 177.40 apiece, up by 4.94% on BSE, after market hours of September 27. The market cap is at Rs 31,932 crore.
The stock's 52-week high and low is at Rs 209.75 apiece and Rs 56.86 apiece respectively. YTD, the stock is up by 116.90%, emerging among the top 2024 winners.
Is NBCC overvalued? As per Alpha Spread data, the estimated DCF Value of one NBCC stock is 43.42 INR. Compared to the current market price of 172.3 INR, the stock is Overvalued by 75%.
NBCC has a long history of bonus issues, stock splits and dividend payout.
Dividends: Since August 2012, the company distributed 15 dividends, as per Trendlyne data. In the past 12 months, the dividend payout was Rs 0.63 per share. Currently, it has a dividend yield of 0.36%.
Stock Splits: NBCC has split its shares twice. The first stock split was of a 1:5 ratio in June 2016, where its face value of Rs 10 was cut to Rs 2 each. Further, the second split was of 1:2, where the face value of Rs 2 was cut to Rs 1 each.
Bonus Issues: NBCC has carried only one bonus issue that was of 1:2 ratio in February 2017. Meaning, that NBCC distributed 1 free share of existing 2 shares to eligible shareholders.
HOLD NBCC Shares:
In its latest note, Geojit said, "With stronger than expected tendering activity and pickup in execution, we largely maintain the FY25 and FY26 revenue estimates. However, the rich valuation restricts the upside potential of the stocks. Therefore, we maintain our HOLD rating and the value of NBCC's core business at a P/E of 51x on FY26E EPS and the book value of the land parcel at Rs.5/share to arrive at the SOTP target price of Rs.189."
For NBCC going ahead, the brokerage expects traction in awarding to be the key to achieving the revenue target for FY25. Standalone revenue increased by 10% YoY to Rs.1,627cr. The expectation for FY25 revenue is Rs.10,000cr with an EBITDA margin of 5.5 to 6%.
NBCC aims to achieve an order book of Rs 1 lakh crore in FY25.
According to Geojit, out of the total order book, NBCC awarded only Rs.17,000cr to contractors and the management is targeting to award Rs.12,000cr to Rs.13,000cr projects in the year. NBCC needs six to eight months to obtain statutory approvals to convert the order book into execution.
Further, under redevelopment projects, NBCC's Nauroji Nagar is at the finishing stage, and the company has already sold Rs 12,500 crore. Geojit said the management has seen a lot of competition for purchasing the flats and office space. The balance of commercial real estate of ~Rs 900cr is likely to be liquidated shortly.
On the stock price, overall, Geojit said though the long-term outlook is positive, the rich valuation limits the upside potential.
NBCC Ltd (NBCC) is a Navaratna Enterprise under the Ministry of Urban Development and their business verticals include, Project Management Consultancy (PMC), Engineering Procurement & Construction (EPC) and Real estate business.
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