NBCC (India) Shares Rise on Robust Q4 Results; Analyst Recommends Buy for Target of ₹159

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NBCC Shares Surge on Strong Quarterly Results, Forecast Further Gains

Team FS

29/May/2024

Key Points

Strong Q4 Performance: NBCC (India) reported a 24.6% YoY increase in net profit and a 43% rise in revenue for Q4 FY24.
Stock Volatility and Performance: Despite high volatility, NBCC shares have rallied nearly 240% over the past year and 75% year-to-date.
Analyst Recommendation: Vaishali Parekh from Prabhudas Lilladher recommends buying NBCC stock with a target price of ₹159 and a stop loss at ₹124.

NBCC (India) Ltd., a government-owned civil construction company, witnessed a notable increase in its stock price, surging as much as 5% on Wednesday, May 29, before slightly retreating from the day’s high of ₹145.80. This upward movement in the Navratna PSU stock comes on the heels of the company’s strong quarterly performance for the January-March period.

Quarterly Financial Highlights
For the fourth quarter ending on March 31, 2024, NBCC (India) reported a significant 24.6% year-on-year (YoY) rise in net profit, amounting to ₹141.5 crore. This impressive increase in profitability was accompanied by a substantial 43% YoY growth in revenue from operations, which soared to ₹4,025 crore. These robust financial results underscore NBCC’s operational efficiency and market position in the civil construction sector.

At the operating level, NBCC’s earnings before interest, taxes, depreciation, and amortization (EBITDA) climbed to ₹240 crore during the quarter under review. The company maintained an EBITDA margin of 6%, reflecting stable operational performance despite market volatilities.

Dividend Declaration
In addition to the strong quarterly results, the NBCC board has recommended a final dividend of ₹0.63 per equity share of ₹1 each for the financial year 2024. This dividend proposal is indicative of the company’s healthy cash flow and commitment to returning value to its shareholders.

Stock Performance and Market Sentiment
The stellar performance of NBCC (India) shares is evident from its remarkable rally over the past year. The stock has gained nearly 240% over the last 12 months and has seen a 75% rise so far this year. Despite its recent rise, the stock is still down by 15% from its 52-week high of ₹169.95.

With a one-year beta of 1.3, NBCC shares exhibit high volatility, indicating significant price fluctuations over the same period. High beta stocks are typically more volatile than the market, which can lead to greater potential for both gains and losses.

Analyst Recommendations
Vaishali Parekh, an analyst at Prabhudas Lilladher, has recommended investors to buy NBCC stock, projecting a potential upside target of ₹159. Parekh advises maintaining a stop loss at ₹124, suggesting a cautious yet optimistic approach to capitalizing on the stock’s future potential.

Midday Trading Update
At 1:50 pm on the day of the report, NBCC shares were quoted at ₹142.95, marking a 2.99% increase on the NSE. This midday price action reflects investor confidence in the company’s strong financial performance and future growth prospects.

In-Depth Analysis of NBCC’s Performance
NBCC (India) Ltd. has demonstrated consistent growth and resilience in its financial performance, driven by robust operational strategies and a strong market presence. The company’s quarterly results for Q4 FY24 highlight several key aspects of its business operations:

Revenue Growth: The 43% YoY increase in revenue is a testament to NBCC’s expanding project portfolio and effective execution of civil construction projects. This growth trajectory indicates the company’s ability to secure and complete high-value contracts, contributing to its top-line performance.
Profitability: The 24.6% rise in net profit reflects NBCC’s efficient cost management and operational effectiveness. Maintaining an EBITDA margin of 6% during a period of revenue expansion showcases the company’s ability to balance growth with profitability.
Dividend Payout: The proposed dividend of ₹0.63 per share underscores NBCC’s commitment to shareholder returns. Dividend declarations are often seen as a positive signal by investors, indicating the company’s financial health and future prospects.
Stock Volatility: With a beta of 1.3, NBCC shares exhibit higher volatility compared to the broader market. This characteristic can attract risk-tolerant investors seeking higher returns, albeit with an understanding of the associated risks.

Future Outlook
NBCC’s strong financial results for Q4 FY24 provide a solid foundation for future growth. The company’s strategic focus on expanding its project portfolio, coupled with its operational efficiencies, positions it well for continued success in the civil construction sector.

Analysts’ positive recommendations further bolster market sentiment, suggesting potential for continued stock appreciation. Vaishali Parekh’s target price of ₹159 implies a significant upside from current levels, while the recommended stop loss at ₹124 provides a risk management framework for investors.

Conclusion
NBCC (India) Ltd. has showcased impressive financial performance and stock market resilience, reflecting its robust business model and strategic execution. The company’s strong Q4 results, dividend declaration, and positive analyst outlook position it favorably for future growth. Investors considering NBCC stock should weigh the potential for significant gains against the inherent volatility, making informed decisions based on their risk tolerance and investment objectives.

As NBCC continues to expand its project portfolio and enhance operational efficiencies, it remains a key player in India’s civil construction sector, poised for sustained growth and value creation for its shareholders.

Also Read : ACX Acquires Terravista Developers for Rs. 296.11 Crore to Boost Infrastructure Development

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NBCC Shares Surge on Strong Quarterly Results, Forecast Further Gains

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