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Adds Manish Sonthalia, vice-president and fund manager, MotilalOswal Asset Management: "This comes as a sentiment-boosterfor the sector. But more than that, we need to see policy actionwhich will facilitate execution in the areas of land acquisition,availability of coal, environmental clearances and financialclosure to name a few." Valuations of most of the companiesare at historical lows. Analysts advise investors to buy only thosecompanies with a strong balance sheet, are low on leverage andenjoy handsome margins. Aiming high, lacking execution The prime minster"s infrastructure development push includesplans to award 42 new port projects, costing Rs 14,500 crore, alongwith investments in two major ports at West Bengal and AndhraPradesh, costing Rs 20,500 crore. The government also announced itwould award new airport projects, including the Navi Mumbaiairport. "The key focus is on railways and ports where we thinkcompanies like GMR (Infrastr-ucture), GVK (Power andInfrastructure), Adani Ports and Gujarat Pipavav (Port) could bekey beneficiaries. However, one needs to see the actual awardingand financial closure of the projects because in many of the casesbalance sheets of companies are stretched," says ManishKumar, who tracks the infrastructure sector at SBICAP Securities. Additionally, about 9,500 km of new road projects along with 4,360km of road maintenance contracts are likely to be awarded. Thiscomes as a welcome relief to companies in the road segment such asIL&FS Transportation Networks Ltd and IRB InfrastructureDevel-opers Ltd, considering that the new target was significantlyhigher compared to road projects of 6,500 km awarded in FY12. Thegovernment has also aimed at adding 18,000 megawatts (Mw) of powercapacity, in addition to 2,000 Mw of atomic power. This issignificant compared to the average power capacity addition in theregion of 12,000-14,000 Mw seen over the last five years. This isgood news for companies in the power equipment segments such asBharat Heavy Electricals Ltd, BGR Energy Systems Ltd and othersmaller players. Stay with leader There are a number of companies which could benefit from increasedfocus on spending in the infrastructure sector. However, apart fromthe policy and execution issues, analysts warn that investorsshould look at good quality companies. Many companies havestretched balance sheets and interest rates are still high whichcould come in the way of benefiting from the opportunity. Analystssay Larsen and Toubro Ltd (L&T) is best-placed or geared tobenefit as a result of increasing focus on the infrastructurespending in the country. L&T is well-diversified, especially its presence both in thepower and construction and engineering space makes it most likelycandidate to benefit. "Slowdown in the orders is an industryissue but companies such as L&T have maintained margins even ina downturn. Its peers have reported losses," says ManishSonthalia. The e-commerce company in China offers quality products such as Designer Wall Clocks , Car Body Sticker Manufacturer, and more. For more , please visit Removable Wall Stickers today!
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