Explained: Why NBCC India shares are falling 30% on mobile trading apps

NBCC (India) Ltd shares are showing a drop of about 30% on some trading apps today, leaving many investors puzzled. However, this significant decline in value is not a reflection of the company’s actual performance, but instead due to a technical adjustment following a bonus issue.
NBCC India shares turned ex-bonus today, in the ratio of 1:2. This means that for every two shares an investor holds, the company will issue one additional share. A bonus issue like this increases the number of shares in circulation but reduces the price of each share accordingly, making it appear lower on certain platforms that may not have adjusted for the bonus issue yet.
As of now, NBCC India shares are trading 3.99% higher, at Rs 117.25 on the BSE after the adjustment for the bonus issue. However, some trading apps may be displaying the pre-adjustment price, which could explain why they are showing the shares to be down by more than 30%.
Bonus shares are issued from a company’s free reserves and surplus with the goal of increasing liquidity in the market. In NBCC’s case, the bonus issue has been set at a ratio of 1:2, meaning every shareholder will receive one fully paid share for every two shares they hold. October 7 is also the record date, meaning NBCC India will determine the eligible shareholders who will receive these bonus shares today. The newly issued shares are expected to be credited to shareholders by the end of October.
NBCC India is set to issue 90 crore shares with a face value of Re 1 each. These shares will come from the company’s free reserves, which stood at Rs 1,959 crore, as per its audited financial statements on March 31, 2024.
The company has performed well in recent times, with its shares increasing by 109% in 2024 and a massive 192% over the last year. NBCC India also secured several new contracts last week, including a Rs 47 crore order for the redevelopment of the SIDBI Vashi project and operational work at the International Craft Complex in New Delhi. Additionally, it won a Rs 101 crore consultancy order for building permanent office facilities for the National Highways Authority of India (NHAI).
Analysts have shown optimism about NBCC’s future. Last month, Nuvama cited the company’s strong order book of Rs 81,300 crore and a book-to-bill ratio of 7.6 times as positive indicators for future growth. The firm also noted that NBCC India has been steadily winning new contracts, with Rs 19,800 crore in orders already secured in 2024 compared to Rs 23,500 crore for the full financial year 2024. The company’s efforts in real estate monetisation are also seen as promising.