First-Time Bonus Likely from This Small-Cap Multibagger: Do You Hold It?

Stock to Watch: Potential Bonus Shares from This Small-Cap Multibagger

BigBloc Construction Limited, one of the largest manufacturers of Aerated Autoclaved Concrete (AAC) Blocks, Bricks, and Panels in India, is considering a bonus issue.

The company's board of directors is scheduled to meet on Friday, July 19, 2024, to discuss and approve the proposal for issuing bonus shares and increasing the authorized share capital, subject to regulatory and shareholder approval.

Current Financial Overview

Share Capital: The company’s current share capital is Rs. 14.14 crore, divided into 7.07 crore equity shares of Rs. 2 face value.

Reserves and Surplus: As of March 31, 2024, the company’s reserves and surplus stand at Rs. 89.87 crore.

Financial Performance

BigBloc Construction has reported strong operational and financial performance, with a 5-year CAGR of 19 per cent in sales and over 80 per cent in net profit. For the financial year 2024 (FY24), the company reported a consolidated net profit of Rs. 30.69 crore and revenue from operations of Rs. 243.22 crore, marking a 21.55 per cent year-over-year increase from Rs. 200.11 crore in FY23. The EBITDA for FY24 stood at Rs. 56.15 crore, a 12.29 per cent rise from Rs. 50.01 crore in FY23. Additionally, the company has recommended a final dividend at the rate of 20 per cent for FY24, subject to approval at the Annual General Meeting.

Strategic Expansion and Joint Ventures

BigBloc Construction is on the brink of a significant transformation in the AAC Block industry. Mr. Narayan Saboo, Chairman of BigBloc Construction Ltd, emphasized the company's commitment to long-term growth and delivering excellent operational and financial results. The proposed bonus issue is seen as a way to reward existing shareholders, increase the company's equity base, and enhance liquidity.

In a strategic move to introduce next-generation walling solutions in India, BigBloc Construction, through its joint venture SIAM Cement BigBloc Construction Technologies Pvt Ltd with Thailand’s SCG International, has commenced operations in India. The joint venture has invested around Rs. 65 crore in a 2.5 lakh cubic meter per annum capacity project in Kheda, Gujarat, which includes India’s first AAC Wall Plant. The plant, inaugurated on June 10, 2024, will produce large format AAC Wall products for the Indian market, with an expected annual revenue of Rs. 100 crore at full capacity. The project can be expanded to 5 lakh cubic meters per year in the second phase.

Company Background and Future Plans

Incorporated in 2015, BigBloc Construction Ltd is the only listed company in the AAC Block space in India. The company operates three AAC Block plants located in Umargaon District Valsad, Gujarat; Wada, Maharashtra; and Kapadvanj, District Kheda, Gujarat. With the new facility in Kheda, the company’s total capacity has increased to 1.3 million cubic meters per annum. BigBloc is among the few companies in the AAC industry to generate carbon credits.

The company’s wholly-owned subsidiary, StarBigBloc Building Material Ltd, has announced plans to raise funds through an SME IPO or preferential issue to support its expansion. StarBigBloc plans to establish two new manufacturing plants with a combined capacity of 1 million cubic meters per annum – one in Chennai and one in North India. These expansions aim to boost the company’s total capacity to over 1.2 million cubic meters per annum within 4-5 years. The Board of Directors approved the fund-raising on May 23, 2024, with details to be finalized later. Currently, StarBigBloc operates a plant in Ahmedabad with a 250,000 cubic meter per annum capacity, serving Gujarat, Udaipur, and Indore.

Sustainable and Innovative Building Solutions

AAC blocks and walls are known for their lightweight, soundproof, and fire-resistant properties. They offer superior build quality, are eco-friendly, and are more economical compared to traditional bricks. BigBloc Construction markets its products under the brand name 'NXTBLOC' and has executed over 2,000 projects so far, with another 1,500 plus in the pipeline. The company’s clients include prominent names such as Lodha, Adani Realty, IndiaBulls Real Estate, Prestige, Piramal, Oberoi Realty, Shirke Group, Shapoorji Pallonji Group, Raheja, PSP Projects, L&T, Sunteck, Sethia Infrastructure Pvt Ltd, Dosti Group, and Purvankara Ltd, among others.

Stock Performance

This Small-Cap stock has delivered returns of 59.58 per cent in the last one year and in the last three years, the stock has jumped by 1,152 per cent turning out to be a multibagger stock.

Disclaimer: The article is for informational purposes only and not investment advice.