The Hindu Business Line : Shaky structure

CONSTRUCTION company stocks are suitable only for investors with a penchant for risk, as trading is characterised by low floating stock and high volatility.

Nagarjuna Construction (NCCL): The company's expertise lies in the execution of highway projects, water-supply-based projects, transmission lines, industrial structures and buildings. The company has a strong order book of about Rs 1,350 crore with completion periods ranging from 2.5 to 3 years.

NCCL expects a turnover of Rs 600 crore in fiscal 2003-04. Road projects contribute slightly over 40 per cent of the revenues though margins are low.

Industrial structures and buildings, which are high margin business, are likely to contribute about 30 per cent of the turnover. Its margins have stabilised over the past six months.

IVRCL Infrastructures: IVRCL has a strong presence in water supply and irrigation-based projects.

IVRCL has a strong order book position of Rs 1,400-1,500 crore with an average completion period of 30-36 months. The company also has plans to increase its net worth by Rs 100 crore through equity expansion. This will help them in the long term.

However, in 2003-04, earnings growth may not necessarily support the imminent expansion in equity.

Madhucon Projects: The company has a strong presence in road segment and irrigation-based projects. The former contributes over 60 per cent of this company's revenue; and the latter, about 25 per cent.

Its order book is at about Rs 900 crore and expects a revenue of Rs 300 crore during FY 04, a 30 per cent growth over the previous year. But given the sharp spurt in price and low liquidity, fresh exposures can be avoided.

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