Shares of NBCC (India) Ltd gained over two percent on September 2 after the PSU firm’s board recommended issuing bonus shares to shareholders at a 1:2 ratio.
This means eligible shareholders will receive one new fully paid-up equity share of Rs 1 each for every two existing fully paid-up equity shares as of the record date, pending approval at the upcoming Annual General Meeting (AGM).
A bonus issue is when a company issues additional shares to existing shareholders for free, based on the number of shares they already own. This is typically done using the company's reserves and surplus, and it increases the total number of shares outstanding without raising new capital.
NBCC (India) has set October 7 as the record date to determine eligibility for the bonus shares. A total of 90 crore shares are proposed to be issued, drawn from free reserves created out of profits as per the audited financial statements as of March 31, 2024. This bonus issue follows a 233 percent rally in NBCC's stock over the past year.
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Established in 1960 as a government civil engineering firm, NBCC operates in three main areas: Project Management Consultancy (PMC), Engineering Procurement & Construction (EPC), and real estate development.
As of March 31, 2024, the company has reserves and surplus totalling Rs 1,959 crore available for capitalization. The bonus shares are expected to be credited within two months of board approval, by October 31, 2024.
Brokerages remain optimistic about NBCC's fundamentals, noting improvements in order intake, execution, and margins, as well as progress in real estate monetization. Last month, Nuvama Institutional Equities reaffirmed its ‘HOLD’ rating with a target price of Rs 198.
The firm highlighted that while NBCC’s book-to-bill ratio of 7.6 is strong, 54 percent of its orders are for ‘self-revenue generating projects,’ making real estate monetization critical for execution.
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In the previous session, NBCC shares closed 4.2 percent down at Rs 186.60 on the National Stock Exchange (NSE). The stock has gained around 128 percent so far this year, beating Nifty's returns of 15 percent during this period and more than doubling investors' capital. In the past 12 months, the counter has surged around 233 percent, compared to Nifty's rally of 30 percent.
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