NBCC (India) Ltd has seen its shares surge by 19% since the lows of October 23, drawing attention from market analysts. Nuvama Institutional Equities has reiterated its 'Buy' rating for the public sector undertaking, highlighting a robust order book, healthy margins, and significant potential from real estate monetization.
Nuvama's Assessment and Outlook
According to Nuvama, NBCC's book-to-bill ratio remains strong at 9.5 times. A notable 53% of its orders are categorized as ‘self-revenue generation projects,’ where the pace of real estate monetization is a key factor in execution.
The brokerage firm acknowledged NBCC's recent success in real estate, including the complete sell-off of residential apartments in Africa Avenue, which generated Rs 5,200 crore. Future monetization plans include units in Vinayak Mandir Marg and Scindia Marg, projected to yield Rs 8,000-10,000 crore in Q4. Additionally, major residential projects in Gurugram Sector-37D (Rs 2,300 crore GDV) and Ghitorni (Rs 8,500 crore GDV) are slated for launch in Q4FY27 and Q1FY28, respectively.
In Q3FY27, NBCC successfully sold two land parcels in Jaipur for Rs 430 crore, with plans to sell two more in Meerut and Ghaziabad during Q4FY27.
Target Price Adjustment and Rationale
While Nuvama has revised its FY27 and FY28 EPS estimates upwards by 16%, 11%, and 8% respectively, factoring in improved margins, it has also adjusted its target PE multiple. The target PE has been cut to 35 times from 45 times due to persistent delays in real estate monetization, which is crucial for the execution of 'self-revenue generation' projects.
Consequently, Nuvama has maintained its 'Buy' rating but revised the target price downwards to INR 120 from INR 133, rolling forward valuations to Q2FY29E. Investors are advised to consult with a qualified financial advisor before making any investment decisions.