New Delhi: Sensing significant growth opportunity in the poor infrastructure network in the country, as many as 30 infrastructure-related companies are aiming to raise funds from the capital markets in the coming weeks.
An analysis of the public issues slated to hit the market in the near future shows a marked shift in investors’ focus toward sectors like infrastructure and real estate that have emerged as potential growth avenues.
Analysts believe the momentum in infrastructure space is gaining speed with sector-related firms planning huge expansion and new, large-scale projects.
The upcoming issues with an infrastructure or real estate edge include realty giant DLF, Omaxe, Housing Development and Infrastructure Ltd, NHPC, Power Grid Corporation of India Ltd, Afcons Infrastructure, Titagarh Wagons as well as follow-on offerings of Bharat Earth Movers Ltd and Mankasia Ltd.
“With the participation of private entities increasing in the large scale infrastructure projects, the sector has become lucrative for investors,” market tracking firm Primedatabase’s CEO Prithvi Haldea told PTI.
Among investor segments, mutual funds (MF) are also upbeat on the prospects of infrastructure-related public issues. There are already a number of infrastructure-focused MF schemes in the market, while a number of fund houses such as SBI are launching new schemes.
Mutual fund tracking firm Value Research Online’s CEO Dhirendra Kumar said: “Investment in infrastructure segment has found favour with the MFs which see it has a key development and a promising sector.”
Besides, MFs can also subscribe to the shares of infrastructure-related firms going to tap the capital markets.
“With several upcoming IPOs in the space, MFs may invest in them through their primary market investment avenue and could also go in for the stocks of these firms after they are listed on the secondary markets,” Kumar said.
According to the approach paper for 11th Five-Year Plan, the Planning Commission has estimated an investment of $320 billion in infrastructure sectors. The power sector will need an investment of Rs4,10,000 crore, while Railways will require Rs3,00,000 crore.
Haldea said all companies want to tap the booming capital markets to fund their future plans. Investors would put money in infrastructure IPOs if the company offering issue has sound fundamentals and good future prospects, he added.
Some of the infrastructure companies’ order book size has jumped up by three-fold coupled with similar rise in the share prices in the last three fiscals.
For instance, power equipment manufacturing firm Bhel’s orderbook has surged to Rs54,000 crore in 2006-07 from Rs23,650 crore at the end of FY04. The share price of Bhel in the corresponding period soared 273.1%.
Similarly, Larsen & Toubro’s order book has grown to Rs36,213 crore from Rs16,970 crore three years ago, while its share price jumped 181% in the corresponding period.