BigBloc Construction Ltd: Posts stellar Q3 profits, declares 20 per cent dividend to shareholders!

The company anticipates achieving 20-25 per cent sales growth in FY24, maintaining a healthy EBITDA margin of 20-25 per cent.

In the ongoing trading session, benchmark indices are maintaining a flat trend after Nifty 50 and Sensex failed to sustain the day's initial gains. Notably, Nifty FMCG and Nifty Metals lead the sectoral indices as Top Gainers.

Amidst mixed sentiments in the broader markets, Nifty Midcap 100 is trading up by 0.29 per cent, while Nifty Smallcap 100 shows a marginal decline of -0.04 per cent for the day. Against this market backdrop, BigBloc Construction Limited, a key player in the Autoclaved Aerated Concrete (AAC) industry known for generating carbon credits is trading up by 2 per cent post its Q3FY24 results disclosed yesterday.

Despite nuanced challenges, the company's financial resilience and operational achievements underscore its forward-looking strategies. The company’s manufacturing plants are located in Umargaon (Vapi) and Kapadvanj (Ahmedabad) in Gujarat and Wada (Palghar) in Maharashtra. It is In December 2023, the subsidiary, Bigbloc Building Elements Pvt Ltd, commenced the second phase at the Wada plant in Palghar, indicating an expansion in capacity by 2.5 lakhs cubic meters per annum.

• Teaming up with Thailand's SCG Group, SIAM Cement Big Bloc Construction Technologies is in the process of establishing a plant in Kapadvanj, Ahmedabad, with an annual production target of 3 lakhs cubic meters for ALC Panels and AAC Blocks within 2-3 months.
• Aiming for robust financial performance, the company targets an ambitious 20-25 per cent sales growth in FY24, coupled with maintaining a healthy EBITDA margin ranging between 20-25 per cent.
• Strategically positioning itself, the company aspires to secure a leadership role in India’s AAC Block Space, with a substantial capacity increase to 13.75 lakhs cubic meters per annum upon successful completion of ongoing expansion projects.

Consolidated Financial Highlights

Bigbloc Construction's Q3 financial performance for the quarter ending December 2023 depicts a robust growth trajectory. Sales surged by an impressive 24.13 per cent, reaching Rs 614.94 mn, a testament to strong market demand or effective pricing strategies. The Profit Before Interest, Depreciation, and Taxes (PBIDT) recorded commendable growth at 21.18 per cent, amounting to Rs 161.26 mn, indicating operational efficiency. However, increased interest expenses at 88.93 per cent signify higher financial costs, impacting Profit Before Tax (PBT), which grew by 6.26 per cent to Rs 113.86 mn. The Profit After Tax (PAT) demonstrated resilience, climbing by 12.18 per cent to Rs 86.19 mn. Year-to-date figures reflect steady growth, although a decline in PBT by -7.35 per cent and PAT by -10.33 per cent suggests nuanced challenges.

dividend Declaration

The company has declared a 2nd interim dividend of 10 per cent, Rs. 0.20 per share for FY23-24. Notably, the majority of the promoter group, comprising 60.03 per cent equity shares, has continued to waive off their dividend rights, considering the ongoing expansion plans.

Operational Expansion

• Bigbloc Building Elements Pvt Ltd: In December 2023, Bigbloc Building Elements Pvt Ltd, a wholly owned subsidiary of BigBloc Construction Ltd, initiated the second phase of the AAC blocks plant in Wada, Palghar, Maharashtra. The company invested around Rs. 30 crores to expand the AAC block capacity by 2.5 lakhs cubic meters per annum. The phase 2 expansion, expected to be completed in four months, will bring the total production capacity at the Wada plant to 5 lakhs cubic meters per annum, generating an anticipated annual revenue of Rs. 200 crores. Notably, the company is eligible for a 60 per cent subsidy from the state government for the Wada project.
• SIAM Cement Big Bloc Construction Technologies Pvt Ltd: In collaboration with Thailand’s SCG Group, SIAM Cement Big Bloc Construction Technologies Pvt Ltd is establishing a plant in Kapadvanj, Ahmedabad, with an estimated investment of Rs. 65 crores. The plant aims to produce 3 lakhs cubic meters per annum of ALC Panels and AAC Blocks, marketed under the brand name ‘ZMART BUILD’. BigBloc Construction holds a 52 per cent stake in the joint venture, expecting to become one of the largest players in the country, with post-expansion total capacities reaching 13.75 lakhs cubic meters per annum. The company anticipates generating 2.5 to 3 lakhs tons of carbon credit annually after the expansion.

Outlook

The company anticipates achieving 20-25 per cent sales growth in FY24, maintaining a healthy EBITDA margin of 20-25 per cent. The strategic aim is to secure a leadership position in India's AAC Block Space with a post-expansion capacity of 13.75 lakhs cubic meters per annum.

BigBloc Construction Ltd's Q3 financial updates showcase a compelling narrative of growth, resilience, and strategic foresight. The company's commitment to expansion projects, partnerships, and sustainable practices positions it as a major player in the competitive AAC industry.

The stock has given 6.5 per cent returns since the commencement of the new year and has delivered multibagger returns of 753 per cent in past 3 years. Thus, investors should keep an eye on this smallcap stock