Best Realty stock to buy now. According to ET and experts, NBCC is the best realty stock to buy. The stock has given 1500% gain in five years.
Rajesh Agarwal, Head of Research at AUM Capital, in a chat with ETNow said: “NBCC’s current order book stood at around Rs 75,000 crore as of March 31, 2017 and we expect it to go higher on the back of AMRUT and Smart Cities projects. NBCC is going to be the biggest beneficiary.”
“NBCC has a robust order book. The best part of the company is that it acts as an intermediary between the contractor and the government. So it makes a good margin, being an asset-light business model. This company could make a return on equity (ROE) of more than 30 per cent. We have a target price of Rs 233 for the NBCC stock. The stock can go even higher once the revenue recognition threshold begins,” Rohit Natarajan, analyst, institutional equities, IDBI Capital, said in a chat with ETNow.
Amid demand slowdown and liquidity crunch in the real estate sector in last five years, government-owned navratna company NBCC has delivered 1,670 per cent return between June 2012 and June 2017. The BSE Realty index has risen 30 per cent in the same period.
Formerly known as National Buildings Construction Corporation, the company’s scrip jumped from Rs 11.86 on June 21, 2012 to Rs 209.80 on June 21, 2017. This means an investment of Rs 1 lakh in the stock five years back would have become Rs 18 lakh today.
Other real estate players like Vipul (up 845 per cent), Gayatri Projects (up 726 per cent), Ashiana Housing (up 483 per cent) and Kolte Patil (up 374 per cent) also delivered handsome returns to investors in this period.
But NBCC, with a current order book of Rs 70,000 crore, is among the top wealth-creation ideas from the real estate space that market mavens are talking about.
“While other real estate companies are saddled with a lot of debt, this is a unique company where there is no debt at all and has a strong balance sheet with robust return ratios. With government’s focus on affordable housing and development of Smart Cities, this company has got a great future going ahead. We have a buy rating on this stick with a target of Rs 280 over a time frame of 12-18 months,” Agarwal said.
Since the end FY2012, net sales and net profit of the company have grown at a CAGR of 12.73 per cent and 13.28 per cent, respectively, till FY17.
Net profit has grown from Rs 190.17 crore in 2011-12 to Rs 354.72 crore for the financial year ended March 31, 2017. Net sales jumped to Rs 6,244.28 crore from Rs 3,429.32 crore during the same period.
The government plans to develop 240 acres of land in the Ghitorni district in South Delhi with Smart City features. The project, estimated to cost over Rs 15,000 crore, is proposed to be developed jointly by CPWD and NBCC on a self-financing basis with no cost to the government.
NBCC would construct about 500 houses and develop substantial office and commercial space for sale to mobilise resources for financing the project.
http://economictimes.indiatimes.com/mar ... 332170.cms
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