National Buildings Construction Corp. Ltd (NBCC) has caught investors’ fancy. The company, which sold shares at 106 two years ago, surged 25% to 683 in the past three trading sessions. The rally is triggered by the announcement that NBCC has signed an agreement with National Waqf Development Corp. Ltd for development of Waqf properties all over India.

The development came amidst reports that the company is in talks to redevelop Andhra Bhavan in New Delhi. Another report points to the possibility of the company developing parts of Andhra Pradesh’s new capital. The financial contours of none of these proposals are known yet. But considering the large number of Waqf properties, analysts expect significant business opportunities for NBCC, if the pact holds.

Also driving investors to the stock are expectations the new government at the Centre will speed up project clearances. At the end of the previous fiscal year, the company’s order book stood at 15,427 crore, which has reportedly grown to around 17,000 crore now, according to analysts. The orders provide ample revenue visibility—they are four times the revenues of the last fiscal year. That can grow manifold if the government awards more projects.

NBCC is pursuing the government of India to award it the redevelopment of three colonies in New Delhi, the company said in its latest annual report. If approved, these projects alone can add 20,000-25,000 crore to the company’s order book, Anoop Kumar Mittal, chairman and managing director of NBCC, told CNBC TV18. That in effect doubles NBCC’s orders.

Apart from this, the company is also looking to develop land and properties of sick public sector enterprises (PSEs). “There are PSEs whose revival, rehabilitation or closure or winding up proposal stand referred to the Board for Reconstruction of Public Sector Enterprises (BRPSE). We are pursuing with the BRPSE for utilization of these unlocked assets of PSUs as a source of revenue generation to be gainfully employed for rehabilitation/revival of ailing public sector enterprises," Mittal said in the latest annual report.

The optimism about new orders is one reason why the stock has more than doubled in the last five months. Apart from a strong order pipeline, investors also like the company for its cash-rich balance sheet, superior return ratios and strong working capital position.

Based on ICICI Securities Ltd’s current fiscal year earnings per share estimates, NBCC is trading at 25 times the price-to-earnings multiple. Its peers like Simplex Infrastructure Ltd are available at less than 20 times the current fiscal earnings estimates.

While NBCC’s secured business profile and strong balance sheet is giving it an edge, valuations can look frothy if the expected surge in new orders does not happen.