NBCC Shares Face Target Cuts Post Soft Q3: Real Estate Monetisation Key to Growth

Shares of NBCC (India) Ltd. declined on Tuesday, February 17, following a reduction in the target price by brokerage firm Nuvama. The firm cut its target price from ₹146 to ₹139 per share, indicating an upside potential of 39% from its previous close of ₹100.2 apiece. Nuvama maintains a 'buy' rating on NBCC but has adjusted its outlook based on recent performance and market conditions.

The company's third-quarter revenue increased by 8% to ₹3,020 crore from the previous year. Adjusted profit after tax (PAT) rose 11% to ₹130 crore, driven by higher other income. Despite these positive figures, Nuvama notes that NBCC's order book remains robust at ₹1.3 lakh crore, with a book-to-bill ratio of 9.8x. Out of this, projects worth ₹30,500 crore are currently under execution.

Nuvama highlights that 60% of the orders pertain to 'self-revenue generating projects', where the pace of real estate monetisation will significantly influence execution. NBCC has already clocked top-line revenue of ₹1,500 crore from the 7-GPRA projects in the first nine months of FY26. The company has awarded ₹2,700 crore worth of works in these projects and has a tender pipeline of ₹1,400 crore. Management expects to complete these projects within the next two years.

Phase 1 of the Amrapali project is likely to be completed by the end of the first quarter of FY27, while 5,800 of the 8,200 units in Phase II have been monetised through bulk deals. NBCC has also been awarded the Supertech projects, with an expected start in FY27. The company plans to launch the Ghitorni and Gurugram Sector 37D projects, with gross development values (GDVs) of ₹8,500 crore and ₹2,300 crore, respectively, in FY27. Additionally, the Dubai and Kochi projects are scheduled to be launched by the end of FY26.

However, concerns about the slowdown in housing volumes have led to a reduction in Nuvama's earnings per share (EPS) estimates for FY26, FY27, and FY28 by 7%, 13%, and 12%, respectively. The firm has maintained its 'buy' recommendation but adjusted the target price to reflect the third quarter of FY28 estimates, which are 45 times the EPS.

At the current market price, the stock trades at price-to-earnings ratios of 36.8 times on FY27 and 31.8 times on FY28 earnings per share estimates. NBCC reported its third-quarter earnings last week, with net profit increasing 39.3% to ₹193 crore from ₹138.5 crore in the previous year. Revenue grew 7.6% to ₹3,022 crore from ₹2,809 crore in the previous year. Earnings before interest, tax, depreciation, and amortisation (EBITDA) declined 21% to ₹114.5 crore from ₹144.7 crore last year, and margins contracted to 3.8% from 5.2%.

All three analysts covering NBCC have 'buy' recommendations on the stock. On Tuesday, NBCC announced it had won two orders worth ₹104.95 crore. The first order, worth ₹90.23 crore from NLC India Ltd., is for the project management consultant for the construction of a rehabilitation and resettlement colony in Jharkhand. The second order, worth ₹14.72 crore, is from Rourkela Steel Plant, SAIL Rourkela, for the development of sports infrastructure and other facilities.

NBCC shares were down 1.7% at ₹98.09 apiece around 12.10 pm on Tuesday. The stock has declined 19.6% this year, reflecting the challenges in the real estate sector and the broader market conditions.