Thursday, March 15, 2012

NBCC IPO

National Buildings Construction Corporation (NBCC), a state run construction company is set to open its IPO  of 1.2 crore equity shares for subscription by diluting 10% stake. The company is engaged in the business of project management consultancy services for civil construction projects; civil infrastructure for power sector; and real estate development.

The issue is a part of divestment programme of Rs 40,000 crore prepared by government for FY12. It is an offer for sale by the government, which comprises a net offer to the public of 1.188 crore shares and a reservation of 1.2 lakh equity shares for subscription by eligible employees. This would be the last issue under divestment programme of FY12.

The IPO will open on 22 March, 2012 and will close on 27 March, 2012. The company has announced the price band at Rs 90 to Rs 106 per share. However, retail investors and employees will get shares at a 5% discount to final price of the issue.

The government could not able to achieve this target of Rs 40,000 crore in this financial year as well. It managed to raise more than Rs 14,000 crore so far through ONGC and Power Finance Corporation. Even the auction issue of ONGC had just sailed through; in fact the issue was bailed out by LIC by subscribing for 40 crore equity shares as against issue size of 42.77 crore equity shares.

Equity shares issued through this IPO are proposed to be listed on the BSE and NSE. IDBI Capital Market Services Limited and Enam Securities Private Limited are the book running lead managers to the issue.

Recommendation:

CARE has assigned a grade 4 out of 5 to the IPO, indicating above average fundamentals. Investing in NBCC IPO can be good for long term investors though if there are significant listing gains, one can take that profit.

Subscription:

NBCC IPO got muted response on the first few days but got 4.93 times subscribed at the close of the IPO.

At the close of the IPO,
QII segment got subscribed by 7.07 times
NII segment got subscribed by 1.7 times
Retail segment got subscribed by 3.4 times
Employee reservation got subscribed by 0.09 times

Allotment:

Click here to check NBCC IPO Allotment status!

Listing:

NBCC IPO got listed on 12 April, 2012. The share of NBCC closed at Rs 97.05 as against issue price of Rs 106, at a discount of 8.4%, after opening at Rs 100 and touching a lower band at Rs 95.05.