Why Bigbloc Construction Share Price is Rising

Despite diminishing hopes of an early US rate cut, domestic equities have shown resilience, buoyed by robust macroeconomic fundamentals and continuous domestic inflows.

With this resilience, India's Nifty 50 index reached a record high for the third consecutive session, driven by widespread gains, particularly in the metal sector.

The NSE Nifty 50 climbed 0.24% to reach an unprecedented 22,249.40, marking the eighth instance in 2024 of the benchmark setting new records.

Amid these soaring Indian markets, share price of Bigbloc Construction has been on a tear.

The shares of Bigbloc Construction have surged over 40% a month.

Here's the reason behind this impressive growth.

#1 Capacity Expansion Plan

Construction material maker Bigbloc Construction is investing Rs 300 million (m) in its Wada plant in Maharashtra to expand the capacity by 2.5 lakhs cubic meters per annum of AAC blocks.

The company anticipates generating Rs 2 billion in revenue from this enhanced facility.

The company started the expansion work at the Wada plant in Palghar district in December last year and expects to complete the project within four months.

The plant capacity will increase to 5 lakh cubic meters per annum after the expansion.

The funding of Rs 300 m will be met by a mixture of internal accruals and debt.

At full capacity, the Wada plant is expected to generate annual revenues of Rs 2 bn per annum. The company is eligible for a 60% subsidy from the state government for the Wada project.

Simultaneously, BigBloc Construction is also in the process of augmenting the capacity of its Kapadvanj plant in Ahmedabad, with an expected completion timeline of two to three months. The overall investment in this expansion project is estimated at Rs 650 m.

This triggered rally in the stock.

#2 Insider Buying

The surge in the stock's momentum gained further traction through a strategic move by a member of the promoter group. Madhu Narayan Saboo recently acquired 1,05,000 equity shares of the company, sending a clear and confident message about Bigbloc's future potential.

This acquisition involved the purchase of 1.05 lakh shares from the open market, leading to an increase in the total promoter group holding to 72.4%.

Beyond being a simple transaction, this move reflects the promoter's unwavering belief in the capabilities and future growth prospects of Bigbloc.

#3 Robust Q3 Results

For the December 2023 quarter, Bigbloc Construction demonstrated robust financial performance, with its top-line witnessing a substantial 24.1% surge to Rs 614.9 m compared to Rs 495.4 m a year ago, indicative of robust market demand.

The EBITDA for the same period reached Rs 161.3 m, marking a notable 21.2% increase from the Rs 133.1 m reported a year earlier. The net profit for the quarter stood at Rs 86.6 m in December 2023, reflecting a 12.5% growth from Rs 77 m in the corresponding period last year.

In response to these positive Q3 results, the board approved the declaration of a second interim dividend at the rate of 10% per equity share of Rs 2 each, fully paid up, totaling Rs 0.2 per equity share on the company's 7,07,87,875 fully paid-up equity shares for the fiscal year 2023-24.

Furthermore, the consolidated capacity utilization for the third quarter reached approximately 75%. Starbigbloc Building Material achieved a capacity utilization of 78%, while Bigbloc Building Elements recorded an impressive 90% capacity utilization.

What next?

Looking forward, Bigbloc Construction foresees achieving a sales growth of 20% to 25% in the fiscal year 2024, maintaining a robust EBITDA margin between 20% and 25%.

With a robust foundation in sustainability, a consistent track record of strong performance, and ongoing support from its promoters, Bigbloc is strategically positioned to capitalize on opportunities within the Indian construction sector and emerge as a frontrunner in the green building movement.

In its strategic positioning, the company aims to establish leadership in India's AAC Block Space, aiming for a substantial capacity increase to 13.75 lakh cubic meters per annum upon the successful completion of ongoing expansion projects.

This vision reflects the company's commitment to growth, sustainability and its aspiration to play a pivotal role in shaping the future of the construction industry in India.

How Shares of Bigbloc Construction have Performed Recently

The Bigbloc Construction stock rose around 19% in the past five days. Over a month, the share price has gained by 45%.

Bigbloc Construction share price touched its 52-week high price of Rs 256.8 on 21 February 2024. Its 52-week low was Rs 117 touched on 29 March 2023.

The company is currently trading at a PB (price to book value) multiple of 30.8 times.

About Bigbloc Construction

Bigbloc Construction Limited is an India-based company, engaged in manufacturing building blocks and aerated autoclaved concrete (AAC) bricks.

The company's AAC blocks are marketed under the brand NXTBLOC, which is a green product for the construction industry. Its other brands include NXTFIX, NXTPLAST, and ZSMARTBUILD.

AAC is a steam-cured mix of sand or pulverized fuel ash (PFA), cement, lime and aeration agent.

The company's plants are located in Vapi and Ahmedabad and cater to the Gujarat and Mumbai markets. Its applications include residential, hospitality and commercial.

For more details, see the Bigbloc Construction company fact sheet and quarterly results.

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