NBCC Hits Record High, Surges 18% as Board Mulls Bonus Shares

NBCC (India) Ltd, a leading state-owned construction firm, saw its stock price rocket by 18% during intraday trading today, reaching a record high of ₹209.75 per share. This surge follows the company's announcement that its Board of Directors will meet on August 31, 2024, to discuss the potential issuance of bonus shares, a move that has sent investor sentiment soaring.

In a statement filed with the Bombay Stock Exchange (BSE), NBCC stated, "The Board of Directors is set to meet on Saturday, August 31, 2024, to consider the proposal for the issue of bonus shares to equity shareholders in a ratio to be determined, subject to shareholder approval." Should this proposal pass, it would mark the company’s second-ever bonus share issuance, following a 1:2 ratio bonus issue back in 2017.

NBCC’s Impressive Stock Rally Fueled by Contract Wins

NBCC's stock has been on an extraordinary rally throughout 2024, gaining 151% from ₹82 to its current high of ₹206. Investors have flocked to the stock in light of multiple large-scale project wins and positive financial results.

One of the significant projects driving the stock’s performance is a recent ₹5.28 billion contract secured by NBCC's subsidiary, HSCC (India), from Haryana's Directorate of Medical Education & Research. Additionally, in August, NBCC bagged two contracts worth ₹720 crore for constructing a new chapter building for the Institute of Company Secretaries of India in Hyderabad and developing land parcels for the Jhansi Development Authority.

Perhaps the most substantial development is a ₹15,000 crore contract from the Srinagar Development Authority to develop a satellite township covering 406 acres in Rakh-e-Gund Akshah, Bemina, in Jammu and Kashmir.

Strong Q1 FY25 Earnings Boost Investor Confidence

NBCC also posted solid earnings in the first quarter of FY25. Net profit for the June quarter rose by 39% year-on-year, reaching ₹107 crore, compared to ₹77 crore during the same period last year. Income from operations increased to ₹2,144 crore, up from ₹1,918 crore in the first quarter of FY24. However, revenues saw a sequential decline of 48%.

The company's robust earnings performance, coupled with its expanding order book, has bolstered investor confidence, further fueling its stock’s upward momentum.

NBCC’s Legacy and Growing Portfolio

Established in 1960 as the construction arm of the Government of India, NBCC has become one of the country's most prominent infrastructure companies. In 2014, it achieved the prestigious 'Navratna' status, a testament to its importance in the public sector. NBCC operates primarily in three segments: project management consultancy (PMC), real estate development, and engineering, procurement, and construction (EPC) contracting.

The company’s real estate projects range from residential apartments and townships to commercial developments like corporate office buildings and shopping malls. NBCC is also branching out into infrastructure sectors such as railways, metro systems, highways, and water supply.

In a strategic move to diversify its operations, NBCC entered the agri-infrastructure sector in FY24, taking on the construction of grain storage facilities as part of the 'World’s Largest Grain Storage Plan,' valued at approximately ₹1,500 crore.

Future Prospects for NBCC

With the bonus share proposal on the table and a slew of recent contract wins under its belt, NBCC is well-positioned for future growth. The company's ongoing diversification efforts into new infrastructure sectors, combined with its historical strength in project management and real estate, make it a top contender in India’s booming infrastructure landscape.

Investors are watching closely as the company continues to expand its portfolio and solidify its role as a leader in public sector construction and development