Multibagger Stock: 1:1 Bonus Announced, Earnings Reported, and Major Capacity Expansion Ahead—Watch Out!
As a gesture of appreciation towards its shareholders and to enhance liquidity, the company's board has recommended a 1:1 bonus issue
BigBloc Construction Limited, one of India's largest manufacturers of Aerated Autoclaved Concrete (AAC) Blocks and Panels, has announced its financial results for the first quarter of FY 2024-25, ending June 2024. The company reported a consolidated net profit of Rs 3.03 crore, reflecting a PAT margin of 5.80 per cent. The Revenue from Operations during this period was Rs 51.57 crore, with an EBITDA of Rs 9.65 crore, corresponding to an EBITDA margin of 18.71 per cent. The earnings per share (EPS) stood at Rs 0.62 for Q1 FY25.
Despite these figures, the company faced several challenges that impacted its profitability. Volume growth remained flat, largely due to market disruptions following the Holi festival and delays associated with the General Election. These disruptions particularly affected the West and North regions, where the availability of migrant labor is crucial for construction activities. Additionally, in Ahmedabad and Gandhinagar, construction work was halted for 4 to 5 hours daily in May 2024 due to excessive heat, as mandated by the Municipal Corporation, which further dampened demand for AAC blocks.
The plant at Umargaon has been under a pre-planned, temporary shutdown since May 18, 2024, for technology upgrades. This downtime, while necessary for long-term operational efficiency, also contributed to reduced production and profitability during the quarter. Furthermore, the company incurred significant expenses related to the inauguration and marketing of its "ZMARTBUILD WALL" product line, launched from its newly commercialized joint venture (JV) plant. Depreciation and other operating expenses were charged for the full quarter, yet the corresponding revenue generation was lower than anticipated, putting additional pressure on profitability.
BigBloc’s capacity utilization at its Building Elements Private Limited division was 78 per cent for the quarter. The installed capacity at this plant increased from 300,000 CBM to 400,000 CBM per annum as of June 1, 2024. The plant is undergoing further capacity expansion, which will boost the installed capacity to 500,000 CBM, with completion expected within the next two months.
In a significant development, the company's joint venture, SIAM Cement BigBloc Construction Technologies Private Limited, inaugurated commercial production at India's first AAC Wall plant in Kheda, Gujarat. However, the JV reported a loss of Rs 2.83 crore for Q1 FY25, of which Rs 1.3 crore is attributed to the JV partner. This loss, due to majority consolidation, also impacted BigBloc’s overall profitability, but the adjusted net profit, after considering the JV impact, stands at Rs 4.39 crore.
Mr. Narayan Saboo, Chairman of BigBloc Construction Ltd, emphasized the company's long-term growth strategy, highlighting its leadership in the AAC block industry. He expressed confidence in ongoing projects at Kapadvanj and Wada, which are progressing on schedule and are expected to significantly transform the market landscape.
As a gesture of appreciation towards its shareholders and to enhance liquidity, the company's board has recommended a 1:1 bonus issue, subject to shareholder approval at the AGM scheduled for August 29, 2024. The bonus issue will utilize free reserves of Rs 28.31 crore and aims to reward existing shareholders while expanding the shareholder base. The bonus shares are expected to be credited by September 18, 2024, following necessary approvals.
Shares of BigBloc Construction Limited have gained 49 per cent in 2024, and over the past three years, the stock has rallied more than 900 per cent, solidifying its status as a multibagger stock.
Disclaimer: The article is for informational purposes only and not investment advice.