May 25 2024, 08:56
6 infra stock with an upside potential of up to 39%:
Among the sectors which have seen a strong re- rating in the last five years, probably infrastructure is amongst the top ones. Like many other sectors here also the re-rating has been largely due to policy push and government spending.
If one looks at the performance of the companies in the last five years, there has been clearly strong growth across the board. So, policy continuity becomes critical for this sector and the stocks.
These kinds of narratives which join the polls and FPI selling tend to hit the sector and stocks which are sitting with big gains and are dependent on government policy push. Even the best of the rational brain can make wrong decisions when there is too much noise which gets created due to a narrative.
When we are looking at the sector ahead of an event, Let's divide the whole thing into two parts. First, is the Infrastructure sector, especially road construction part of it better placed than it was five years ago and did the government play a role in it? Second, how to hedge the exposure which one has for the election day result.
This hedging becomes important so that one is able to avoid any sort of selling which can be triggered because of the narrative that FPI knows more about Indian poll results than anyone else and that is why they are selling. The problem with getting impacted by the narrative is that sometimes, one ends up selling the stocks with a feeling that one should protect the profit and end up selling early. Just because stock prices have moved sharply cannot be the reason for selling one's investment, only if there is an indication that fundamentals of a sector having an issue one should look to sell.
Infrastructure Stocks - Annual Total Income (Rs cr.)
FY18
FY19
FY20
FY2
Ashoka Buildcon
3,652.60
5,007.23
5,152.21
5,121.8
Growth YoY %
37.1
2.9
-0.
KNR Constructions
2,125.39
2,365.85
2,517.37
2,955.2
Growth YoY %
11.3
6.4
17.
IRB Infrastructure Developers
5,862.77
6,902.62
7,047.18
5,487.5
Growth YoY %
17.7
2.1
-22
J Kumar Infraprojects
2,079.25
2,815.21
2,998.84
2,596.1
Growth YoY %
35.4
6.5
-13
Welspun Enterprises
1,181.94
1,860.10
1,919.43
1,671.5
Growth YoY %
57.4
3.2
-12
PNC Infratech
2,435.74
3,820.97
5,778.20
5,895.0
Growth YoY %
56.9
51.2
2
source:et
May 25 2024, 09:00
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