Here are the various Brokerages Reviews on NBCC - National Buildings Construction Corporation IPO.
Retailers Get 5% DiscountAnand Rathi Analysts A.K. Prabhakar, Shweta Prabhu and Vivek Gujrati recommend the following,
A PSU construction company with no debt and good cash resources on its books becomes a very attractive play in this market scenario. A good execution track record and a diverse portfolio seem to be the key to its success. With more government spending in infrastructure and with a sound order book, we have a rosy outlook for the company. We advise subscribing to the issue.
SMC has a 4 out of 5 Rating and the following recommendation,
The fundamentals of the company look quite impressive with its expertise management. Moreover the company has strong order book position. With its significant experience in the three business segments, it has established a good track record of managing a diverse range of projects. The company also intends to pursue strategic alliances with established domestic as well as international players. Moreover the rating agency CARE has assigned grade 4 to the company, which means the company has above average fundamentals
Way2Wealth Analyst Tanushree Rao has the following Recommendation,
At the offer price bands, the issue is quoting at a P/E of 7.3-8.5 its annualized H1FY12 earnings. Most of the infra and construction companies are available at a 7x P/E. Currently, similar companies under the sector are reeling under pressure. However, an intended increase in government spending in infrastructure and a sound order book puts the Company is a sweet spot. Though the business model is concentrated on PMC segment and primary clients being various central and state governments, its steady cash flows, debt free status and dividend yield render the issue attractive. Only conservative investors with defensive mindset can SUBSCRIBE to this issue.
Nirmal Bang Analyst Amish Pansuria and Silky Jain have the following Views,
At the upper price band of Rs. 106, the IPO is available at a P/E of 8.5x its FY12 annualised earnings which is at a discount compared to its closest peer (EIL) due to lower margins and high Other income. With increased spending by the government towards the infrastructure sector demand for projects from central and state governments will continue to be there. NBCC which receives projects on nomination basis is expected to maintain a growth trajectory because of this demand. Considering strong growth, attractive valuations and debt free status, we recommend “SUBSCRIBE” to the issue
KR Choksey analyst Ankush Mahajan has the following Recommendation,
At upper band of Rs 106, NBCC is trading at PE of 8x to FY12E earnings, we recommend subscribe based on 1.) sustainable business model, 2.) higher ROCE 16.8% as compare to peers, 3.) Rs 98 value cash per share & zero debt in balance sheet 4.) continuous dividend payout record. We recommend “Subscribe” to NBCCL.
Aditya Birla Money Analyst Shreynas Mehta has the following recommendation,
Adjusting for the 5% retail discount (`5.3 per share on the higher band); sustainable cash on the Balance Sheet leading to consistent treasury income and the available land parcel (125acres), there is some room for appreciation on listing (considering stable equity environment) and therefore, we recommend investors with risk appetite to “Subscribe” only for short time listing gains. We however do not recommend NBCC from a long term portfolio perspective
HSBC Analyst Supriya madye has the following views,
A PSU construction company with no debt and good cash resources on its books provides comfort on financial health of the company. A good execution track record and a diverse portfolio seem to be the key to its success. With more government spending in infrastructure and with a sound order book, we see the company to benefit in coming period. At offer price band of Rs 90-Rs 106, the stock is offered at PE band of 7.7 – 9.1 on FY11 EPS of Rs 11.7 and price band of 7.2-8.5 on annualised FY12 EPS of Rs 12.4. There are no listed players in this business segment to compare the company on the valuation front. The company’s debt free books, preferred status for various government projects, last 5 years records of free cash flow generation and management expertise gives us comfort on business prospects of the company in near future. We advise Subscribe to the issue.
Emkay Analysts Jitesh Bhanot and Ajit Motwani have the following Recommendation
At an upper of the IPO price band (Rs106) NBCC is available at PER of 7.4X & 5.3X its expected FY12/13 EPS of Rs14/Rs19.7. This is at discount to its construction peers, which are trading at average PER of 10X. Considering NBCC superior free cash generating business model & reasonable growth prospects we believe that the valuation are attractive and there is enough upside even at the top end of IPO price band. We recommend subscribe on NBCC with a target price of Rs 140 valuing it a 10x (in line with its construction peers) FY13 core EPS of Rs 9, real estate at 50mn per acre on the free hold land under its possession and valuing only the surplus cash of Rs 30bn. Based on the strong positioning of NBCC and a discounted valuation we rate this IPO as a Subscribe rating.
GEPL Capital Analyst Aditya Bapat has the following Views,
At the upper end of its price band, NBCC is available at P/E of 8.52x which is cheaper than its peers; Simplex Infra (13.18x), IRB Infra (15.89x), JP Asso. (11.24x). Although the government has stressed need for infrastructure development from time to time, its intent is yet to be proved serious. Hence, it is exposed to risks that all companies in the infrastructure space are facing. However, considering the strong cash balance and debt free status of the company, we believe that the company could provide good returns for the long term investors. Hence, we recommend SUBSCRIBE with a long term perspective
