Why NBCC Share Price is Rising

Public sector undertakings (PSUs) have attracted significant investor interest in recent times.

Driven by factors such as government reforms, infrastructure development initiatives, and dividend payouts, many PSUs have witnessed impressive stock price appreciation.

Among these rising stars, NBCC (National Buildings Construction Company) stands out. NBCC is a premier construction and project management company under the Ministry of Housing and Urban Affairs.

The company offers a wide range of services, including real estate development, infrastructure projects, and project management consultancy.

NBCC recently made headlines with its stellar stock performance. The company's share price recently hit an all-time high, fuelled by positive investor sentiment. This surge in interest coincides with a recent press release from NBCC.

Let's delve into the details of this announcement to understand the driving factors behind the stock's remarkable performance.

Bonus Issue

NBCC (India) experienced a notable surge in its share price after the company announced a potential bonus share issue. The Board of Directors is scheduled to meet on 31 August 2024, to discuss this proposal.

Bonus share issues play a crucial role in influencing a company's share price. By converting a portion of the company's reserves into equity, the total number of shares available in the market increases.

This move typically results in a lower share price, making the stock more accessible to a broader range of investors. The increased accessibility often leads to higher demand, which can drive the share price up.

For NBCC, this potential bonus issue marks a significant event, as it would be the second in the company's history, following a 1:2 ratio bonus issue in 2017.

Investors tend to view such moves positively, as they reflect the company's confidence in its financial health. This confidence, coupled with the anticipation of more affordable shares, is why NBCC share price has responded so strongly to the news.

What Next?

NBCC is set for substantial growth as it continues to build on its success in securing high-value contracts.

It recently won a Rs 5.3 billion (bn) project from the Directorate of Medical Education & Research in Haryana and a Rs 15 bn contract from the Srinagar Development Authority.

These projects will not only boost revenue but also solidify its position as a leading player in the construction and infrastructure sectors.

Looking forward, NBCC is strategically diversifying its operations. The company is targeting various infrastructure segments, such as roads and highways, metro projects, and station redevelopment.

These sectors are expected to see increased government investment, providing NBCC with numerous opportunities for growth. By expanding its footprint in these areas, the company is positioning itself to capture a larger share of the infrastructure market.

In addition to its core areas of expertise, NBCC is also making a significant entry into the agri-infrastructure sector. The Rs 1.5 bn grain storage project under the 'World's Largest Grain Storage Plan' is a testament to the company's willingness to explore new opportunities.

NBCC's future growth is likely to be supported by its strong financial position and its 'Navratna' status, which allows it to take on larger and more complex projects. The company is expected to continue winning government contracts, further bolstering its project pipeline.

Additionally, NBCC's focus on real estate development, including residential and commercial projects, remains a key area of growth, especially as urbanisation trends continue in India.

How NBCC Share Price has Performed Recently

In the past five days, NBCC share price has rallied 6%. In the last month, it is up 3.7%.

In 2024, so far its share price has surged 137.6% and it has rallied 280.6% in the last one year.

The stock touched its 52-week high of Rs 209.8 on 28 August 2024 and a 52-week low of Rs 51 on 30 August 2023.

About NBCC

NBCC (India), formerly known as National Buildings Construction Corporation, is a Government of India Navratna Enterprise that provides construction services.

It was incorporated in 1960 as a private limited company and became a public limited company in 2011.

NBCC operates across India and overseas, and is organised into three segments: Project Management Consultancy (PMC), Engineering Procurement & Construction (EPC), and Real Estate (RE).

The company has worked on a variety of projects in sectors such as housing, transportation, power, and the environment, and has also completed public welfare projects. NBCC is known for its innovative approach and high quality delivery mechanisms.

To know more, check out NBCC's latest factsheet and quarterly results.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Happy Investing.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...