Mar 22, 2012, 09.13 AM IST | Source: CNBC-TV18

Strong balance sheet to help NBCC, says Udayan

According to CNBC-TV18s managing editor Udayan Mukherjee, todays NBCC IPO will not grab a lot of headlines, but because it is a good balance sheet company it might get done.

According to CNBC-TV18s managing editor Udayan Mukherjee, todays NBCC IPO will not grab a lot of headlines. Its a small one, only Rs 120 crore, but because it is a good balance sheet company it might get done.

It is an infrastructure consulting company, and there are a lot of similar companies in the market, but since the IPO comes at a time when infrastructure has picked up, the issue should not be a problem.

Valuations are okay at about 8 P/E and 1.5 times a book. NBCC comes from a sector where balance sheets are in a mess, but it has got a lot of cash on its books and is a zero debt company, so that is an advantage. For the Rs 1,200 crore marketcap that they want, they have got Rs 1,400 crore of cash lying on their books, so that should be enough to see the issue through.

As a business it is not terribly exciting but it will quietly go through. This is not what the market is looking for. There is a need for much bigger IPOs from the government during the course of the year.

Watch the accompanying video for more details..

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