State-run builder NBCC eyes India's land bank to boost orders

The firm is betting on the redevelopment of millions of square feet of vacant government property to grow its order book by 25% a year to 2020

India's state-run National Buildings Construction Corp (NBCC) is betting on the redevelopment of millions of square feet of vacant government property as it plans to grow its $3.4 billion order book by 25% a year to 2020.

That is roughly twice the rate of growth over the past few years, Anoop Kumar Mittal, chairman and managing director, said. 

NBCC, which is 90% owned by the government, builds and redevelops real estate and infrastructure. It is seen as a major beneficiary of the current government's spending push, making its stock a the top performer among India's state-owned firms.

The stock has notched up a more than threefold jump over the past 12 months as investors cheer a steady income stream.

"We are in discussion with sick and other public sector units to monetise their land," Mittal said.

These ailing public-sector firms include giants like the National Textile Corp, which owns swathes of former mill land in overcrowded Mumbai.

"This will be our focus business area in the next five years," he said.

While there is no official estimate for the amount of state-owned real estate that could be up for redevelopment, Mittal said the opportunity was "significant", fuelled by Prime Minister Narendra Modi's promises to build affordable homes, "smart" cities and to reboot manufacturing.

The company is already in talks with the railways ministry to build low-cost homes on excess land it owns across the country, Mittal said - a move that could help Modi fulfil his manifesto promise of providing housing for all by 2022.

NBCC, currently working on a redevelopment project in Delhi worth Rs 5,000 crore ($780 million), is also awaiting cabinet approval on three other projects in the capital that are expected to add about Rs 18,000 crore to its order book.

Unlike the majority of India's construction and real estate sector, NBCC has net cash - Rs 1,500 crore - but its revenue remains largely tied to the state, which accounts for more than 70% of its top line.