This SME stock surges 122% in 7 weeks; up 2091% from IPO price in 9 months

Shares of Bondada Engineering were locked in the upper circuit for the eight straight trading session, hitting new high on the BSE in Friday's intra-day trade.

Shares of Bondada Engineering (Bondada) were locked in the upper circuit for the eight straight trading day, up 5 per cent at Rs 1,642.95, hitting new high on the BSE in Friday’s intra-day trade in an otherwise weak market. In comparison, the S&P BSE Sensex was down 1.1 per cent at 74,009 at 12:38 PM.

  

In past seven weeks, the stock of telecom infrastructure company has surged 122 per cent. Currently, Bondada stock was trading 2,091 per cent higher over its issue price of Rs 75 per share. Bondada made its stock market debut on August 30, 2023 under the SME segment.

The sharp rally in the stock price of Bondada was attributed to strong order inflows and March quarter (Q4FY24) earnings.

Last month, Bondada incorporated a wholly-owned subsidiary namely, Bondada Green Engineering Private Limited. The main objective of the Bondada Green Engineering is to manufacture metal frameworks or skeletons for construction, including towers, masts, trusses, bridges, and other related components.

Earlier, on March 19, Bondada announced that it received a Letter of Intent for grant of work order from The Singareni Collieries Company Limited (SCCL), pertaining to contract of Design, Engineering, Supply, Construction, Erection, Testing & Commissioning of 67.5 MW (AC) (with 220 KV Evacuation voltage) capacity ground based Solar PV Power Plant and 10 years Plant O&M at Mandamarri Area, SCCL with gross order value amounting to Rs 434 crore.

NLC India Limited also granted work order to Bondada for Balance of System (BOS) work for SOMW Solar Power Project including the O&M for three years amounting to Rs 81.34 crore.

Meanwhile, for Q4FY24, Bondada’s profit after tax (PAT) more than doubled to Rs 31.44 crore from Rs 14.87 crore in Q4FY23. Revenue from operations jumped 70.8 per cent year-on-year at Rs 505 crore.

For the financial year 2023-24 (FY24), the company posted PAT of Rs 46.31 crore, as against Rs 17.13 crore in FY23. Revenue from operations more-than-doubled to Rs 801 crore from Rs 371 crore in previous fiscal.

The group has longstanding relationships with customers and suppliers. It has executed projects in more than 23 states for telecom, solar and OFC-related services. Customers include well-established players in the telecom industry, such as Reliance Jio, Airtel, Tata Communications, Bharti Infratel, Indus Towers, American Tower, and BSNL. Bondada has bagged repeat orders from these customers.

Last month, CRISIL Ratings assigned its ‘CRISIL BBB+/Positive/CRISIL A2’ ratings to the bank facilities of Bondada. The ratings reflect the proven track record of the group in the telecom and solar EPC (engineering, procurement and construction) industry, extensive experience of the promoters, strong order book providing revenue visibility, diverse business operations, geographical presence and well-established customer base, and a healthy financial risk profile, the rating agency said in its rationale.

An order book of over Rs 1,600 crore (ongoing) as of January 2024 is to be executed over the next 12-24 months. Furthermore, the group has been declared L1 in orders worth more than Rs 1,500 crore, for which execution is expected to commence over the medium term.

However, the order book is highly concentrated, with a single order from Bharat Sanchar Nigam Ltd (BSNL) accounting for over 70 per cent of the current order book. However, the strong credit profiles of the counterparties mitigate concentration risks to an extent. Timely execution of the key orders and diversification of order book will be monitorable, CRISIL said.