Ace Investor: Why has Rakesh Jhunjhunwala reduced his stake in this construction company? Find out here!

According to the latest quarterly filings, Rakesh Jhunjhunwala reduced his position from 12.8% to a 12.4% stake in the company. 

Rakesh Jhunjhunwala is known as the Big Bull of India. Many investors follow his buy or sell action on the stock market. Recently, according to the latest quarterly filings, Rakesh Jhunjhunwala has decreased his exposure to one of his portfolio companies. He reduced his stake from 12.8% to 12.4% in NCC Ltd. 

NCC Ltd is engaged in the infrastructure business. The company primarily deals in the construction of industrial and commercial buildings, roads, water supply, mining, power transmission lines, environmental projects, etc.

A few of the company's clients include the Ministry of Transport & Communication, Bangalore Metro Rail Corporation, Nagpur Metro Rail Corporation Ltd and Reserve Bank of India. Talking about financials, March FY22 quarterly result was robust. Q4 revenue was reported at Rs 3477 crore with 23.42% YOY and 15.32% sequential growth. However, in terms of revenue generated, 2019 was the peak year for the company and it is unable to surpass those levels. 

The growth for the last few years for the company remains muted. The 3-year sales growth for the company was weak at -5%. The 3-year net profit growth also remained poor at -19%. This poor financial performance of the company is reflected in the share price of the company. The shares of NCC Ltd delivered a negative return of 12% in the last 3 years. 

The company has an ROE, ROCE, and dividend payout of 6.13%, 12.9%, and 1.38%, respectively, as per the FY22 period ending. Promoter holds a 21.99% stake, while both FIIs and DIIs together hold a 20.83% stake in the company. The promoter has pledged a 14.9% stake. 

Talking about valuations, the company has a market capitalization of Rs 3651 crore. The stock is trading below its book value. The shares are trading at a PE multiple of 11x. On July 14, at 11:19 am, the shares of NCC Ltd are trading at Rs 57.75 with 0.6% loss for the day.