BigBloc Construction achieved a 48.64% rise in net consolidated profit for Q1 FY25, totaling INR 3.03 crore compared to INR 5.90 crore the previous year. Despite a 4.86% decline in total income to INR 52.26 crore, the company's efficient operations and increased capacity utilisation to 78% highlight its resilience. Chairman Narayan Saboo announced plans for a 1:1 bonus share issue, pending AGM approval, using INR 28.31 crore from free reserves. The company is expanding capacity from 400,000 to 500,000 cubic metres and continues to address market challenges with strategic initiatives.
BigBloc Construction has announced a remarkable rise in its net consolidated profit, reporting a 48.64% increase for the quarter ending June 30, 2024. The company earned a profit after tax of INR 3.03 crore in Q1 of FY25, compared to INR 5.90 crore during the same period in the previous financial year. This growth comes despite facing some challenges in the market.
The total income for BigBloc during the same quarter decreased slightly by 4.86% to INR 52.26 crore, down from INR 54.93 crore the previous year. This drop in revenue can be attributed to several factors affecting the construction industry, including seasonal disruptions and planned maintenance at production facilities.
Chairman Narayan Saboo highlighted that the company is advancing its projects in Kapadvanj and Wada, which are expected to play a significant role in reshaping the market dynamics. He stated that the aim is to reward loyal shareholders and improve stock liquidity, and as such, the board has recommended a bonus issue to strengthen the equity base.
The company's capacity utilisation reached 78% in the first quarter, reflecting efficient operations. Additionally, BigBloc has significantly increased its installed capacity, growing from 300,000 cubic metres per annum to 400,000 cubic metres as of June 1, 2024. Plans are in place for further expansion, with targets set to increase capacity to 500,000 cubic metres in the near future.
In a board meeting held on July 19, 2024, BigBloc's leadership approved the issuance of bonus equity shares in a 1:1 ratio, meaning each shareholder will receive one bonus share for every existing share held, pending approval at the upcoming Annual General Meeting on August 29, 2024. The company intends to use INR 28.31 crore in free reserves for this initiative, which aims to reward shareholders and broaden the shareholder base.
While BigBloc has seen significant profit growth, several market challenges have impacted its operations. The company faced a slowdown in volume growth during the current quarter due to disruptions caused by the Holi festival and delays linked to the recent Lok Sabha elections. These factors particularly affected operations in the northern and western regions of India, where availability of migrant labour is crucial for construction projects.
In cities like Ahmedabad and Gandhinagar, construction activities were further hampered by extreme heat. The local municipal guidelines mandated frequent breaks in construction work, pausing operations for four to five hours daily during May 2024. Additionally, the Umargaon plant underwent a planned temporary shutdown starting May 18, 2024, for critical technology upgrades, restricting production during that period.
Despite these setbacks, BigBloc's management remains optimistic about the future, anticipating that the planned expansions and enhanced operational efficiencies will position the company well to meet increasing demand in the construction sector. The proposed increase in the authorised share capital to INR 30 crore will further enable BigBloc to navigate these market challenges effectively while pursuing growth opportunities.
Investors and market analysts will be watching closely as the company moves forward with its strategic initiatives, particularly the results of the upcoming AGM, which will seek necessary approvals for the bonus issue and capital expansions. Involving stakeholders and improving shareholder returns will be key focuses for BigBloc as it continues to adapt to the fluctuating landscape of the construction industry in India.
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