NBCC (India) Ltd shares turned ex-bonus today in a 1:2 ratio, which means one bonus share is issued for every two shares held by investors.
This move led to an increase in the number of outstanding equity shares and a proportional reduction in the share price. However, despite the adjustment, the stock witnessed a 3.99% increase, trading at Rs 117.25 on the BSE.
A bonus issue, typically, increases the liquidity of a stock by making it more affordable for investors.
In NBCC’s case, the new shares are expected to be credited to investors by October 31, two months from the date of approval.
Some trading platforms might still reflect the unadjusted price, showing a misleading 30% decline in value. However, this drop is purely technical, as the issuance of bonus shares does not impact the overall value of the investment.
NBCC India (NS:NBCC), the government-owned entity, issued a total of 90 crore shares as part of this bonus issue.
These shares have a face value of Re 1 and have been drawn from the company’s free reserves and surpluses.
As of March 31, 2024, the company’s audited financial statements showed Rs 1,959 crore available for capitalization through reserves and surplus.
NBCC India’s strong performance and steady growth
NBCC India has been on an upward trajectory in 2024, with the company’s shares up by an impressive 109% so far this year and 192% over the past 12 months.
The company’s consistent growth can be attributed to several factors, including improved order intake, execution, and margins, as well as increasing traction in real estate monetization.
Last week, NBCC India announced several key order wins that further solidify its position in the construction and real estate sectors.
These include a Rs 47 crore order for the SIDBI Vashi redevelopment project and operation and maintenance works at the International Craft Complex in New Delhi.
Additionally, the company secured a Rs 101 crore consultancy order for the construction of a permanent office building for the regional offices (ROs) and project implementation units (PIUs) of the National Highways Authority of India.
These projects are expected to boost NBCC India’s financial performance in the coming quarters and demonstrate its ability to win new contracts in a competitive market.
Robust order book and positive outlook
NBCC India’s growth prospects look promising, with a robust order book valued at Rs 81,300 crore.
According to Nuvama, the company has a book-to-bill ratio of 7.6 times, indicating a solid backlog of projects in the pipeline.
The company has already secured Rs 19,800 crore worth of orders year-to-date, compared to Rs 23,500 crore for the entire fiscal year 2024.
This strong order accretion, coupled with improved real estate monetization, bodes well for the company’s future growth.
Nuvama also noted that NBCC India’s ability to monetize its real estate assets effectively and maintain strong execution capabilities have contributed to its positive outlook.
The combination of these factors, along with a consistent stream of new projects, positions the company for continued success in the years ahead.
Bonus shares and future prospects
The bonus issue not only increases liquidity in the market but also signals the company’s confidence in its financial position.
By drawing from its reserves and surplus, NBCC India demonstrates its capacity to reward shareholders without straining its financial health.
The move also aligns with the company’s long-term strategy of increasing shareholder value and improving stock liquidity.
With a strong balance sheet, a steady pipeline of orders, and a solid track record of execution, NBCC India is well-positioned to capitalize on future opportunities in the infrastructure and real estate sectors.
As the company continues to expand its footprint and secure new projects, investors can expect to see continued growth in both stock performance and financial results.