NCC Shares Jump 6% After Securing ₹10804 Crore BSNL Contracts
NCC Ltd. shares surged 6% after securing two major contracts worth ₹10,804.56 crore from BSNL, nearly matching its market capitalization of ₹12,836 crore. The contracts involve BharatNet’s middle-mile network in Uttarakhand, Madhya Pradesh, Dadra & Nagar Haveli, and Daman & Diu, with the Uttarakhand project valued at ₹2,647.12 crore and the other at ₹8,157.44 crore. Both projects have a three-year construction period and a 10-year maintenance phase.
Despite this positive development, NCC’s Q3 FY25 net profit dropped 12.5% to ₹193.2 crore, while revenue grew 1.6% to ₹5,344.5 crore. EBITDA fell 16.6% to ₹420.9 crore, with margins shrinking from 9.6% to 7.9%. The stock closed at ₹204.45 on BSE in the previous session, down 41% from its peak. Rekha Jhunjhunwala holds a 10.63% stake (6.67 crore shares) in NCC as of December 2024. The stock’s RSI stands at 56.4, indicating neither overbought nor oversold conditions.
NCC specializes in infrastructure projects such as roads, bridges, housing, and power transmission. This order win is expected to boost NCC’s growth and strengthen its market position.
NCC Shares Jump 6% After Securing ₹10804 Crore BSNL Contracts
Shares of infrastructure giant NCC Ltd. jumped 6% during Wednesday’s trading session (March 26) after the company announced it had secured two major contracts from Bharat Sanchar Nigam Limited (BSNL). These projects, valued at ₹10,804.56 crore (excluding GST), are part of the government’s BharatNet initiative to enhance digital connectivity in rural India.
Contracts Nearly Equal NCC’s Market Value
The order value is significant, nearly matching NCC’s market capitalization of ₹12,836 crore as of Tuesday’s closing. The contracts involve the design, construction, operation, and maintenance of BharatNet’s middle-mile network, a crucial component of India’s rural broadband infrastructure.
The projects are divided into two packages:
- Uttarakhand Telecom Circle – ₹2,647.12 crore: Involves upgrading and maintaining connectivity infrastructure in the region.
- Madhya Pradesh, Dadra & Nagar Haveli, and Daman & Diu – ₹8,157.44 crore: Covers central and western India, making it the larger of the two projects.
Both contracts require a three-year construction period followed by a 10-year maintenance phase, ensuring long-term revenue visibility for NCC.
Financial Performance Shows Mixed Results
Despite securing this large order, NCC’s recent Q3 FY25 financial results indicate some challenges. The company reported a 12.5% drop in net profit to ₹193.2 crore, compared to ₹220.7 crore in the same quarter last year.
Other key financial metrics:
- Revenue: ₹5,344.5 crore (up 1.6% YoY)
- EBITDA: ₹420.9 crore (down 16.6%)
- EBITDA Margin: 7.9% (down from 9.6% in Q3 FY24)
- EPS (Earnings Per Share): ₹3.08 (down from ₹3.51)
This decline in profitability and operating margins suggests rising costs are impacting the company’s bottom line.
Stock Reaction and Growth Potential
Following the BSNL order announcement, NCC’s stock rallied 4.7% to ₹214.25, reflecting investor optimism. However, the stock remains 41% below its all-time high, indicating potential for further gains if the company executes its projects efficiently.
Analysts consider this contract a major milestone, as NCC classifies orders above ₹1,000 crore as significant under its internal policies.
Investor Interest and Technical Indicators
NCC continues to attract interest from investors, including Rekha Jhunjhunwala, wife of late stock market icon Rakesh Jhunjhunwala. As of December 2024 filings, she holds a 10.63% stake (6.67 crore shares) in the company.
Technical analysis:
- RSI (Relative Strength Index): 56.4 (indicating the stock is neither overbought nor oversold)
- Beta: 1.9 (suggesting high volatility compared to the broader market)
About NCC Ltd.
NCC Ltd. is a leading infrastructure player specializing in the construction of roads, buildings, water supply systems, power projects, and mining operations. The company has also ventured into real estate development, further expanding its portfolio.
Why This Matters
The BharatNet project aims to connect over 250,000 rural villages with high-speed internet, bridging the digital divide. NCC’s involvement in this initiative not only strengthens its order book but also enhances its credibility as a trusted partner for large-scale government projects.
While short-term financial performance has been underwhelming, the scale of the BSNL contract could drive long-term revenue growth and margin expansion, provided the company manages costs efficiently.
Conclusion
NCC’s stock rally highlights investor confidence in its future growth, despite current profitability challenges. With a robust order pipeline and a strategic role in national infrastructure development, NCC remains a key player to watch in the construction sector.