Budget 2022 Stock: Strong balance sheet, lucrative valuations make NBCC best budget stock, says Anil Singhvi

In a run-up ahead of Budget 2022, Zee Business Managing Editor Anil Singhvi, along with his research team, decodes why this real estate public sector navaratnas company – NBCC -  is a perfect bet a month ahead of budget, and lists out near-term to long-term triggers, which could give bumper returns. 

While explaining why NBCC is a perfect budget stock, the managing editor states that at least 7 of 9 years a month ahead of budget, the stock has reported a growth between 10-28 per cent, while in 5 out of 7 instances, the company had been a direct beneficiary of budget announcements. 

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As speculated, the real estate and infra to get a big boost, besides the government is likely to make 35 per cent higher allocation in the highway sector, research analyst Ashish Chaturvedi states. NBCC, a 6-decade old company is primarily into real estate, project consultancy and EPC businesses. 

Quoting that the company has strong fundamentals and financials, Chaturvedi points out, “NBCC has an order book of Rs 7800 crore, which shows the visibility of revenue for next 8-10 years. Besides, India also has a good presence globally, as the company has Rs 1000 crore project in Maldives.” 

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Despite lower share price, the stock has attractive valuations, as it is a cash-rich company with Rs 4800 crore and zero debt, the research analyst points out. The company has over 50 per cent cash as compared to its market cap of Rs 9200 crore, Singhvi adds further. 

The average return on equity (RoE) in five years is 17 per cent, while it has shown a splendid growth in FY20-FY23E with one-side growth in revenue and FY23E profit would be Rs 370 crore as expected. 

In the near-term trigger, the Subsidiary of NBCC, Amrapali projects’ channel partner has been assigned and with its sale, the company to get the direct benefit of Rs 2000 crore, the research analyst mentions.  

Singhvi said, “Government’s complete focus is on divestment, and non-core land bank developing work will be done by NBCC, as PSU companies asset management sale will continue in this budget too. This developing and selling of land banks will also have a direct benefit to NBCC, as a trigger.” 

The managing editor sees three targets for the stock at Rs 65, Rs 75, and Rs 80 per share amid multiple triggers.  

Choice Broking Executive Director Sumeet Bagadia says, “NBCC chart looks good and shows a rally. It convincingly has sustained above 200-DMA (Daily Moving Average).” The analyst sees easily 20 per cent move possible in the stock, in a short-term basis with an immediate target of Rs 51-60 a share.” 

He expects, the stock would grow further, once breaches Rs 60 per share levels, and a big rally is expected going forward.