The Hindu Business Line : Infrastructure stocks gain investors’ interest

Kolkata, Jan. 1 Infrastructure stocks have been attracting investors’ interest, particularly domestic ones. According to analysts, the current buying in the sector stocks is presumably for long-term. “Going forward, infrastructure sector would increasingly engage policy makers to boost demand and create jobs in a year of slowdown. However, in the near-term matching liquidity to increase activity may not be visible. But it is expected that things may ease out as the year progresses ,” said Mr Ajay Jaiswal of Microsec.

Stimulus package

Dalal Street is expecting another dose of monetary and fiscal stimulus for the economy, which should bring more liquidity and bring down cost for the infrastructure sector. The Planning Commission Deputy Chairman, Mr Montek Singh Ahluwalia, kept the market’s hope alive on December 29 by saying that the Government will come out with a second stimulus package for this fiscal and another package for the fiscal year 2009-10 in the next few days. The Government came out with a stimulus package on December 7 announcing a public expenditure package worth Rs 20,000 and reducing excise duty by four per cent in all manufactured items except petro products.

But the analysts point out that for infrastructure companies, earning visibility will take time to fructify. The project gestation period being long, capital flow is also crucial. According to Kotak Securities, large players in this space, who are less dependent on raising fresh capital from market, will outperform.

The last quarter has seen delay or postponement of infrastructure projects. The industrial capex plans have also seen a slowdown. “For infrastructure sector outlook, there is nothing short-term, one has to take a long-term view only,” said Mr V.K. Sharma of Anagram Securities.

Certain brokerages have also been trying to take a closer look at various big time projects at the bidding stage. India Infoline said that its recent interaction with National Highway Authority of India officials suggested that there is bidding interest for a number of projects. “About 25 projects worth about Rs 20,000 crore that have at least two bidders could be awarded over the next couple of months,” it said.

Larsen & Toubro today closed up 6.11 per cent with decent traded volumes. GVK Power also posted a gain of over 6 per cent. Jaiprakash Associates moved up 5.48 per cent. IVRCL Infrastructure finished with a gain of 4.7 per cent. GMR Infra also finished in the gainers’ list. Its monthly gain is 47 per cent. But Gammon Infra, which closed marginally in the red on Thursday, has posted a gain of over 120 per cent in the past one month.

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