Vascon Engineers stock increases 8% after receiving 262.19 Cr for the construction of Gov. Medical College

When the company received an order for the building and maintenance of a Government Medical College in Chhattisgarh worth 262.19 crores, shares of this multi-bagger real estate stock surged up to 8%. In the past month, the company’s stock has gained nearly 35 percent.  With a market capitalization of 1,640.53 crores, the stocks of Vascon Engineers Limited, a civil construction company, opened their trading hour at Rs.72 and currently trades at Rs.75.49.  The company’s scrip witnessed an intra-day high, also marked as the fresh 52-week high price, of Rs.78.45, indicating a gain of 8 percent as compared to the previous close of Rs 72.64 apiece.  Such sharp movements in the stock price were witnessed after the company, through a regulatory filing with the BSE dated 9th October 2023, intimated that the company received a Letter of Intent (LoI) from ‘Bridge & Roof Company (India) Limited’, a Government of India Enterprise worth 262.19 crores.

The order pertains to the planning, designing, construction and maintenance of a Government Medical College in Chhattisgarh under the Chhattisgarh Medical Services Corporation Limited. The order has been undertaken on an ‘EPC’ basis and the same has to be completed within a period of 24 months from the date of commencement. Keeping a purview of just six months, the company’s stock has proven to deliver multibagger returns of 180 percent, i.e., if someone had invested 1 lakh in the stock six months back, it would have converted to 2.80 lakhs. 

Having a walkthrough of the consolidated financials reported, the company increased its operating revenues as well as after-tax profits with the former moving up from 656.86 crores during FY21-22 to 1,019.38 crores during FY22-23 and the latter, taking a shift from 35.92 crores to 99.41 crores keeping the timeframe the same. Due to the same, the basic profitability metrics of the company such as the Return on Equity (RoE) as well as the Return on Capital Employed (RoCE). The RoE increased from 4.82 percent during FY21-22 to 11.67 percent during FY22-23, and, RoCE took a shift from 6.93 percent to 11.58 percent.