NBCC (India) Ltd. has come under scrutiny following the release of its third quarter earnings, prompting brokerage firm Nuvama to adjust its target price for the company's shares from ₹146 to ₹139. This adjustment signifies a 4.8% reduction while still indicating a potential upside of 39% based on the previous closing price of ₹100.2 per share. Analysts are particularly focused on the company's performance, as it reported a revenue increase of 8% year-on-year, reaching ₹3,020 crore. Notably, the company's adjusted profit after tax (PAT) rose by 11% to ₹130 crore, buoyed by an increase in other income sources.
Despite these positive indicators, Nuvama's analysts have raised concerns regarding the sustainability of NBCC's revenue growth, particularly given that 60% of its current order book—valued at ₹1.3 lakh crore and with a book-to-bill ratio of 9.8x—comprises self-revenue generating projects. The pace at which these projects can be monetized will significantly influence their execution timeline. In the third quarter alone, NBCC secured new projects worth ₹3,300 crore, though the broader context of the real estate market's slowdown raises questions about future growth.
The management of NBCC has outlined ambitious plans for upcoming projects, including those in Ghitorni and Gurugram, which are expected to launch in FY27 with gross development values of ₹8,500 crore and ₹2,300 crore, respectively. The company is also working on several other initiatives, such as the Supertech projects, and anticipates completing Phase 1 of the Amrapali project by the end of Q1 FY27. However, Nuvama has reduced its earnings per share (EPS) estimates for FY26, FY27, and FY28 by 7%, 13%, and 12%, respectively, to reflect the ongoing challenges in the housing sector.
Despite the target price adjustment, Nuvama has retained its 'buy' recommendation for NBCC, emphasizing that the stock currently trades at price-to-earnings ratios of 36.8 for FY27 and 31.8 for FY28 earnings estimates. The company reported a net profit of ₹193 crore for the third quarter, marking a 39.3% increase from ₹138.5 crore in the same period last year, alongside a revenue increase of 7.6%. However, EBITDA saw a decline of 21% to ₹114.5 crore, resulting in a margin contraction to 3.8% from the previous year. The overall outlook for NBCC remains cautiously optimistic, contingent on the successful monetization of its self-revenue generating projects in a challenging market environment.