NBCC: A Solid Construction Play on Government Capex

Given that the Central government has been the prime mover in infrastructure and capex spending over the past few years, several companies in different segments such as roads, power and construction spaces have been beneficiaries.

Even as the government continues to spend on infrastructure, there is also an outlay in the form of grants-in-aid for creation of capital assets. This amount is allocated by the Centre to States and other entities to construct their own buildings, machinery and productive assets. From ₹2.7 lakh crore in FY25 to ₹3.1 lakh crore in revised Budget estimates for FY26, the figure is set to increase to ₹4.93 lakh crore in FY27.

And in this space of asset creation operates a niche player with Central ministries, State governments and select PSUs as its main client base.

As a Navaratna Central public sector enterprise (CPSE), NBCC is a leading construction player in the construction sector. It is predominantly involved in project management consultancy (PMC) projects involving institutional, housing and industrial segments. The company takes up redevelopment of government colonies, vacant land parcels as well as construction of hospitals, medical colleges, offices, airports and bridges.

NBCC also has overseas presence with operations in Mauritius, Maldives, Seychelles, Dubai and Jeddah. It is looking to expand operations in other geographies.

A minor part of its revenues come from EPC (engineering, procurement and construction) and real estate development works.

The company’s stock is down almost 25 per cent from its high made last year at around ₹130.

At ₹98, the NBCC stock trades at 29 times its likely per share earnings for FY27. The stock’s five-year median PE (Price earnings) ratio is around 35 times. The BSE Realty index trades at over 39 times. On a relative basis, the stock does appear to be reasonably valued. However, given the general volatility around mid- and small-cap stocks, this valuation multiple means accumulating on stock price declines may be a relatively safer option for investors with a three-year perspective.

A thriving asset-light business model, a bulky order-book that lends considerable revenue visibility, a sturdy client base dominated by State and Central government entities and a strong execution track-record are positives for the company.

Healthy financials

Over the three-year period from FY22, NBCC’s consolidated revenues grew at a CAGR of 16.1 per cent to ₹12,039 crore in FY25, while net profits rose at a rate of 32.8 per cent over the same period to ₹557 crore.

In the first half of FY26, the company’s revenues grew 15.5 per cent year on year over H1FY25 to ₹5,301 crore, while net profits increased 25.6 per cent to ₹292 crore. Although EBITDA margins (excluding other income) are closer to 4 per cent in H1, the company hopes to finish the full year with 6-6.5 per cent levels given that H2 and especially Q4 tend to be quite strong.

NBCC is a net debt-free company and has remained so for a few years now.

Executing smartly

As mentioned earlier, PMC projects are the company’s major revenue source, accounting for over 92 per cent of revenues usually (96 per cent in H1FY26). The EPC and real estate segments contribute 4-8 per cent of revenues.

NBCC executes civil and infrastructure projects under the PMC model on a fixed agency fee basis, usually as a proportion of the total project value. In some cases, it also receives marketing fees.

The company’s PMC strategy is a self-revenue generation model catering to redevelopment projects. In such cases, the land is given by the government. The company monetises part of the land through commercial means.

The three models of monetisation include: Outright sale of a part of land; long-term lease of a part of the built-up area; and free-hold sale of a part of the built-up area.

This helps in funding the development of public infrastructure.

Urban redevelopment projects such as Netaji Nagar, Sarojini Nagar and Nauroji Nagar, New Moti Bagh, East Kidwai Nagar in Delhi are some of its key project executions.

For example, NBCC is developing the General Pool Residential Accommodation (GPRA) Colony in Netaji Nagar, New Delhi, into a modern hub with 4,882+ residential units, offices and commercial spaces.

The company’s PMC clients broadly come from three categories.

Central government: Ministry of Housing and Urban Affairs, Ministry of Defence, Ministry of External Affairs, Ministry of Finance, Ministry of Renewable Energy, Ministry of Home affairs etc.

Education institutes: IIMs, IITs, NITs, AIIMS, Central universities, State medical colleges, Jawahar Navodaya Vidyalaya etc.

State governments: Haryana, Rajasthan, Odisha, Kerala, Himachal Pradesh, Maharashtra, North-Eastern States etc.

Some of its overseas project executions include Institute for Security and Law Enforcement Studies (ISLES) at Addu City, Maldives; Indian Pavilion at the World Expo 2020, Dubai; Social Housing Projects in Mauritius and New Supreme Court Building at Port Louis Mauritius, among many others.

NBCC has an order-book of ₹1.28 lakh crore as of September 30, 2025, to be executed over the next several years. This order-book is over 10x the company’s FY25 revenues.

About ₹34,000-crore worth of the order-book already has running projects.

Another couple of projects, MAHAPREIT (₹25,000 crore) focuses on projects involving cluster developments, data centres and infrastructure in Maharashtra and another ₹15,000 crore from Srinagar Development Authority to develop a 406-acre township are also in the pipeline in the coming quarters.

A key risk to the recommendation would be any large and unforeseen cutbacks in planned grants by the Central or State governments.

Published on February 7, 2026