Shares of NBCC India have surged up over 300% in the past year. Now analysts at Kotak Securities think the stock is heading towards a big fall.

The NBCC Analyst: Kotak Securities maintained the sell rating for the stock with a target price of ₹79. The target reflects an around 44% downside from the stock’s current market price of around ₹142.

The NBCC Thesis: The brokerage noted that during the December quarter, NBCC’s performance presented a mixed bag of results. While the company’s revenue slightly exceeded the brokerage’s estimates, its net profit fell short of projections.

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The brokerage highlighted that the company aims to achieve a consolidated revenue of approximately ₹10,500 crore, accompanied by an EBITDA margin range of 5-5.5%.

The analysts have adjusted their earnings estimates for NBCC for the fiscal years FY24E to FY26E. These adjustments are to reflect the company’s aggressive growth approach. The revisions range from 4% to 17%.

Despite the positive outlook on earnings, the brokerage’s outlook on the stock did not change. As per the brokerage, the company’s recent bull run has made the stock expensive and at these levels, the risk-to-reward ratio seems skewed.

Nuvama also downgraded the stock from “buy” to “hold” citing concerns about the expensive valuation.

Price Action: NBCC's share price was up 2.19% to trade at ₹144.40 on Tuesday afternoon.

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