NBCC: Company Overview:
Incorporated in 1960 as a wholly owned Government of India undertaking under Ministry of Urban Development (MoUD), NBCC is engaged in the in the business of providing:
- Project Management Consultancy (PMC) services for Civil Construction Projects for Central and State Governments (formed 93.36% of Total Operating Income of FY11)
- Civil Infrastructure for Power Sector (2.02% of total operating income of FY11); and
- Real Estate Development (formed 4.61%of Operating Income of FY11)
The Company is headquartered in New Delhi and in addition have 10 regional / zonal offices across India. The projects undertaken by the Company are spread across 23 states and 1 union territory in India. In addition, the company has also undertaken projects overseas. NBCC’s Consultancy and Project Management Division has been accredited with ISO 9001:2008. As of the date of the RHP (Red Hearing Prospectus), the President of India acting through the MoUD, GoI holds 100% of the company’s equity share capital.
NBCC IPO Issue Details:
- Issue Opens on: Thursday, March 22, 2012
- Issue Closes on: Tuesday, March 27, 2012
- Net Issue: 11,880,000 Equity Shares
- QIBs portion 50% of Net Offer: 5,940,000 Equity Shares
- NIBs portion 15% of Net Offer: 1,782,000 Equity Shares
- Retail portion 35% of Net Offer: 4,158,000 Equity Shares
- A Discount of 5 % on the Offer Price shall be offered to Retail Bidders and Employees
- Bids can be made for a minimum of 60 equity shares and in multiples of 60 equity shares thereafter
- Retail investors can bid for maximum of 2220 equity shares at lower end of price band and 1860 shares at higher end.
- IPO Grading: “IPO Grade 4/5” by CARE – indicating above average fundamentals
- Listing on: BSE & NSE
- NBCC Price Band: Rs. 90 – 106 (5% discount for retail & Employees)
- Book running lead managers: IDBI Capital Market Services Limited and Enam Securities Private Limited
- Registrar to the Issue: Bigshare Services Pvt. Ltd.
NBCC Financial Summary:
Why should you invest in NBCC IPO?
- IPO Grading: “IPO Grade 4/5” by CARE
- Established brand name and reputation.
- Operations in diverse sectors with strong Order Book position.
- Qualified and experienced management.
- Significant experience and track record.
- Vast Industry knowledge and technical expertise.
Risks in NBCC IPO:
- The company’s revenues are significantly dependent on PMC business. Any decline in PMC business, could adversely affect the company’s business prospects, financial condition and results of operations.
- Certain board of directors are involved in a number of legal proceedings, which may adversely impact the company’s business reputation.
- There could be cyclical risks associated with this industry.
NBCC IPO Price, EPS, PE, Book Value:
PAT (Profit After Tax) margin which used to be at close to 14% for FY08 fell to 4.5% for FY11. The issue is issued at a price-to-book of 1.5 as the book value is at Rs 60. At lower price band of Rs 90, it is issued at a price-to-book of 1.5. The expected EPS is of Rs 13-14 for FY11 and FY12. Extrapolating its six months performance, it is issued at a PE multiple of 7-8. As against that there are many private sector companies providing similar kind of services and are available at a price-to-book of 0.6-0.9 and a PE multiple of 4-6.
Currently, Infra and construction companies are reeling under pressure and going by the current scenario the issue is not a cheap one. Though the sector offers substantial growth, there are concerns and risk factors which could affect the company’s earnings. At the indicative offer price, the issue is for long-term investors only and for traders who want to sell on listing, it could be a tricky one.
You can read about NBCC IPO Daily Subscription Status here.