Navratna PSU, NBCC witnessed a buying trend on Thursday, November 28, 2024, as the company bagged a heavy order of Rs 916 crore in a single day, including a massive order from another PSU giant HUDCO. NBCC shares touched the Rs 100 mark and closed on a positive note. A strong order book in H1FY25 gives revenue visibility to NBCC in the coming years. Does that make NBCC an attractive bet?
NBCC Share Price:
During trading hours of November 27, NBCC shares jumped as much as 5% to hit an intraday high of Rs 100.49 apiece on BSE. After market hours on BSE, the stock ended at Rs 98.82 apiece, up by 3.3% with a market cap of Rs 26,681.40 crore. The stock's 52-week high and low are at Rs 139.90 apiece and Rs 45.69 apiece respectively.
YTD, the stock has jumped by 81.22% on BSE, while in a year, the upside is about 118% as of now, making NBCC a multi-bagger.
NBCC New Orders:
On November 27, NBCC bagged two orders cumulatively worth Rs 916 crore. The major order is Rs 600 crore due to an MoU with HUDCO.
As per the regulatory filing, NBCC (India) Limited has signed a MoU with HUDCO for the development of 10-acre institutional plot at Noida sector-62 as a Project Management Consultant.
The second order was also announced on November 27, to the tune of Rs 316 crore. The work has been awarded by ST & SC Development, Minorities & Backward Classes Welfare Department, Government of Odisha. The project is for upgradation of Primary school Hostel (PSH) under State Sector Scheme at various location in the state of Odisha.
NBCC Share BUY Or SELL?
According to Kotak Securities' latest report, as per management, the company has consolidated/standalone order backlog of ~Rs84.4k/70.4k cr, respectively which gives revenue visibility for the coming years. Of this, 55% are from PMC and 45% are from redevelopment including EPC and real estate. Out of the total order book, the company has awarded ~Rs22k cr of contracts. The company intends to award ~Rs15k cr of work in FY25E and similar value in FY26E as well.
Further, Kotak's note highlighted that NBCC has added Rs22.3k/28k cr of new orders on standalone/consolidated basis, respectively in H1FY25 and targets to add Rs40k cr order in FY25 to take it order backlog to Rs1 lakh cr by end of FY25. As per management, the company is looking at redevelopment of PSU land, Pradhanmantri Awaas Yojna projects, stressed real estate projects (Supertech), international projects, etc to grow its order book.
In Kotak's view, NBCC has a strong order book which gives revenue visibility for the next 4-5 years. Based on opportunities from PMC, redevelopment and real estate business, NBCC aims to achieve ~Rs2 lakh cr of order backlog, Rs25,000 cr of revenue and 8-9% EBITDA margin in the next five years (by FY28).
However, Kotak pointed out that NBCC has aggressive growth targets for the next five year. But, achieving these ambitious targets would depend upon faster decision making from its key clients on prospective projects, speedy approvals of projects and continued strong demand in the real estate sector.
Kotak believes that the pace of monetization of real estate in the redevelopment projects and awarding of projects would be key drivers for future revenue growth.
On the valuation, Kotak's note said, "We downgrade revenue and margin estimates based on Q2FY25 resulting in a 7% downgrade in adjusted earnings for FY25-FY26. Based on FY25E/FY26E/FY27E EPS of Rs2.2/2.9/3.6, (from Rs2.3/3.1 for FY25E/FY26E adjusted for bonus issue), the stock is trading PE of 41.4x/31.1/25x, respectively. Despite recent correction, the stock is still available at an expensive valuation."
In 2024 so far alone, NBCC shares have rewarded bonus issue of 1:2 ratio for which it turned ex-date on October 7, 2024. While the company has delivered up to Rs 0.63 per share as a dividend and its ex-date was on September 6, 2024.
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