Title: Relationship of NBCC (National Buildings Construction Corporation) Limited with Nifty 50.
Author: Neha Kinvatkar
Introduction:
NBCC (National Buildings Construction Corporation) Limited is a government-owned construction and real estate development company under the Ministry of Housing and Urban Affairs, Government of India. Established in 1960, NBCC specializes in project management consultancy (PMC), engineering procurement & construction (EPC), and real estate development. Headquartered in New Delhi, NBCC has played a crucial role in India’s infrastructure development, handling prestigious projects such as government buildings, smart cities, housing projects, and redevelopment initiatives. With a strong presence in India and international markets, NBCC is recognized for its expertise in sustainable and green construction practices.
Objective: To find out Beta of NBCC & its significance.
Literature Review:
NBCC’s Revenue Growth and Profitability Trends
Reddy, et al (2023) stated that NBCC (National Buildings Construction Corporation Limited), a Navaratna company in the construction sector, has shown a mixed profitability trend from 2015 to 2022. Its total revenue grew from ₹4,809 Cr in 2014-15 to ₹5,734 Cr in 2021-22, with a slow CAGR of 2.22%, while expenses grew at a slightly higher CAGR of 2.54%, impacting profitability. Although the company maintained steady revenue growth, fluctuations in expenses affected its overall profit margins. Compared to its peers, NBCC’s growth rate was lower than BEL and NLC but better than SCOIL.
NBCC’s Growth and Market Position
Mahajan, et al (2022) stated that NBCC has demonstrated consistent growth with a 20% CAGR over the past five years, driven by its strong presence in Project Management Consultancy (PMC), Real Estate Development, and EPC Contracting. The company has secured an order book exceeding ₹80,000 crore, reinforcing its leadership in the infrastructure sector. NBCC’s unique business model and focus on government redevelopment projects have contributed to its sustained expansion. However, further technological integration and efficient project execution will be crucial for maintaining this growth trajectory.
Data Collection:
NBCC and Nifty 50 data was downloaded from NSE site from the period 01/01/2024 to 31/12/2024 and the data was manipulated to find out the Friday closing time. Weekly returns were calculated. Weekly results of Nifty 50 is X and Weekly returns of NBCC is Y. Y was regressed on X.
Data Analysis:
Equation: NBCC Return(Y) = 1.113 + 2.645 Nifty 50 Return(X) (T-stat = 2.564)
N= 48, R2 = 0.127, F = 6.574
Interpretation:
The regression equation describes the relationship between Nifty50 (X) and NBCC’s share price (Y), indicating that NBCC’s share price is the dependent variable, while Nifty50 is the independent variable. The positive coefficient of 2.645 suggests that for every unit increase in Nifty50, the NBCC share price is expected to increase by 2.645 units. With , the value is 0.127, implying that approximately 12.7% of the variation in NBCC’s share price can be explained by changes in Nifty50. The F-value for the model is 6.574. The p-value for the slope is 0.014, which is less than the conventional threshold of 0.05. This indicates that the relationship between Nifty50 and NBCC’s share price is statistically significant at the 5% level. Consequently, this model provides evidence to suggest a significant linear relationship between Nifty50 and NBCC’s share price.
Conclusion: Since Beta value is 2.645 which is more than 1 it indicates that it is good to invest for short term.
References:
Mahajan, N., et al. “Integrating digital mission and sustainable development goal-9 for building technologies: A study of navratna companies of India.” IOP Conference Series: Earth and Environmental Science. Vol. 1084. No. 1. IOP Publishing, 2022.
Reddy, Mr P. Harinatha, K. Govindarajan, and G. Vijaya Bharathi. “PROFITABILITY PERFORMANCE OF SELECT NAVARATNA COMPANIES.”, 2023.