NBCC stock skyrockets 18% to hit record high as company considers bonus shares

Shares of NBCC (India), the state-owned construction firm, surged 18% in today's intraday trading, hitting a new all-time high of ₹209.75 per share following the company's announcement regarding the potential issuance of bonus shares.

The company's Board of Directors is scheduled to meet on Saturday, August 31, 2024, to discuss and potentially approve this proposal.

"Meeting of Board of Directors of the Company, NBCC (India) Limited, is scheduled to be held on Saturday, August 31, 2024, to, inter alia, consider the proposal for the issue of bonus shares to the equity shareholders of the company in the ratio, as it may deem fit by way of capitalization of reserves, subject to the shareholders approval," the company said in a regulatory filing on the BSE.

If approved, this would be NBCC's second issuance of bonus shares, with the first being a 1:2 ratio bonus issue back in 2017, according to Trendlyne data.

Stellar performance

The company's shares have been on a tear this year, skyrocketing 151% from ₹82 to ₹206, as investors eagerly snapped up this Navaratna stock amid a steady drumbeat of order wins. This impressive performance has cemented the stock's position as a top pick among investors looking to tap into its growth potential.

In mid-August, the company's wholly-owned subsidiary, HSCC (India), secured a contract worth ₹5.28 billion from the Directorate of Medical Education & Research, Haryana.

Additionally, in the second week of August, the company secured two more contracts worth a total of ₹720 crore. These projects involve constructing a new chapter building for the Institute of Company Secretaries of India in Hyderabad and developing two land parcels for the Jhansi Development Authority. 

Furthermore, the company has been awarded a significant ₹15,000 crore contract from the Srinagar Development Authority for developing a satellite township spanning 406 acres at Rakh-e-Gund Akshah, Bemina, in Srinagar, Jammu and Kashmir, India, as per the company's exchange filing. 

In the recent June quarter (Q1 FY25), the company posted decent performance, with net profit rising by 39% year-on-year to ₹107 crore, up from ₹77 crore in the same period the previous year. Income from operations increased to ₹2,144 crore in the first quarter of the current fiscal year, compared to ₹1,918 crore in the corresponding period last year. However, revenues declined by 48% sequentially.

Established in 1960 as the construction arm of the Government of India, NBCC achieved 'Navratna' status in 2014. Its core operations span across three primary segments: project management consultancy (PMC), real estate development, and EPC contracting.

The real estate segment includes residential projects like apartments and townships, as well as commercial projects such as corporate office buildings and shopping malls.

The company is now looking to diversify into other infrastructure segments such as roads and highways, railways (station redevelopment), metro, water supply and irrigation, solar, etc. In FY24 it diversified into the agri-infrastructure sector through the construction of grain storage under the ‘World’s Largest Grain Storage Plan’, with an approximate value of ₹1,500 crore.

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