NBCC aims to double revenue to ₹25,000 crore by expanding real estate development: CMD Mahadevaswamy

“We’re focusing on expanding our real estate business, using our land bank to build both residential and commercial properties," K. P. Mahadevaswamy, chairman and managing director, said in an interview.

The company has about 60 acres of land that it intends to monetise to expand its real estate business. Projects are expected to be launched soon in cities including Jaipur, Gurgaon, Ghaziabad, and Coimbatore, Mahadevaswamy said.

“In tier II cities, none of the local developers has a brand name as strong as NBCC," said Prashant Thakur, head of research and advisory at real estate consultancy Anarock. “This will definitely be a good advantage as they foray into these cities."

NBCC, which built the Bharat Mandapam Convention Centre in what used to be known as the Pragati Maidan complex in New Delhi, already has at least 10 commercial and residential projects across India.

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Real estate development currently accounts for a small fraction of NBCC’s revenue. The company gets 93% of its revenue from providing project management consultancy (PMC) services for the government’s civil construction projects such as residential and commercial complexes, hospitals, educational institutions and property redevelopment. The remaining revenue comes from its engineering, procurement and construction (EPC) business and real estate development.

The move will pit NBCC against private builders including DLF, Godrej Properties, Tata Housing, the Lodha Group and the Prestige Group, but the company hopes to benefit from the government’s renewed thrust on infrastructure and the real estate sectors. NBCC has taken up the construction of stalled housing projects, which it expects will not only deliver homes to waiting buyers but also establish the company’s presence in the real estate space.

“NBCC as a brand name and a government-backed entity will definitely have an edge in the market, especially in the north, where there are many instances of stalled projects," Thakur said. “I'm assuming, since they have existing land bank, they would have got it at a very competitive rate long time back. They will have a cost advantage as prices in most cities, even tier II, have shot up."

India’s real estate sector is projected to grow to an estimated market size of $1 trillion by 2030 from $180 billion in 2020. Growth will be driven by demand in the major metropolitan cities of Bengaluru, Chennai, the National Capital Region, Hyderabad, Kolkata, Mumbai and Pune, according to a report by KPMG and the National Real Estate Development Council.

Redevelopment projects

NBCC is currently working on rebuilding government staff residential colonies in Nauroji Nagar, Netaji Nagar and Sarojini Nagar in New Delhi, which are part of seven such general pool residential accommodation projects. The company acts as the project management consultant in such projects.

“We are also in talks with various state governments for redevelopment/development projects and have already signed MoUs in Goa, Kerala, Jammu and Kashmir," Mahadevaswamy said.

The company redeveloped New Delhi’s New Moti Bagh colony in 2012 and East Kidwai Nagar Colony in 2020. The government accommodation projects are funded through capital generated by monetizing properties on behalf of the ministry of housing and urban affairs.

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To leverage its almost seven-decade expertise in construction, New Delhi-based NBCC is eyeing distressed residential assets across the country including Supertech Ltd’s 17 stalled projects launched in the National Capital Region, Dehradun and Bengaluru. Their construction came to a halt after a financial crisis that eventually led to insolvency proceedings for the builder in 2021.

“Close to 4.5 lakh buyers are waiting for their homes across the country with projects getting stuck. We are willing to take over distressed properties and make them successful," Mahadevaswamy said. “For Supertech, we are awaiting a decision which we expect to come out soon."

The Supreme Court had previously appointed NBCC to take over the Amrapali group’s 24 stalled housing projects in Noida and Greater Noida in 2019 as the project management consultant. Of the 38,500 flats, NBCC has delivered 24,000 units and intends to complete the remainder by March 2025.

Subsidiary listing

The company also plans to list HSCC (India) Ltd, its subsidiary that provides consultancy services in hospital planning, design, engineering, and procuring equipment.

“We are considering listing HSCC in the coming years, though a formal decision will be taken after due consideration," the CMD said.

NBCC posted profit after tax of ₹414.38 crore on total income of ₹10,666.68 crore on a consolidated basis in FY24, according to its annual report. 

The company’s shares fell 0.3% to ₹89.74 at the close of trade on the BSE on Tuesday. The stock has gained 65% so far in 2024.

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NBCC is also likely to face its share of challenges as it focuses on real estate development, Thakur said.

“Being a construction guy is one thing, but becoming a developer, it requires full understanding of valuation, land acquisition, project planning, construction, and efficient marketing and sales, so this could be a challenge," Thakur added.

However, he said that on the plus side, after the success of the Amrapali project, NBCC will be able to assure prospective home buyers that its projects will be completed and delivered on time. This is a lucrative business opportunity for them, Thakur said.