Mumbai: Shares of infrastructure-related companies are likely to remain upbeat and provide significant returns to investors, riding on hopes of increased funding for various infra projects in the upcoming Budget, analysts said.
Infrastructure-related industries including construction, cement and power have been on a gaining streak after the Congress-led UPA received a decisive mandate in its favour in the general elections.
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“Clearly with government spending on infrastructure sector expected to grow considerably under the new government, market sentiment is bullish on stocks of companies related to this sector, including construction, cement, power and capital goods,” Bonanza Portfolio assistant vice president Avinash Gupta said.
Major construction and infrastructure firms, including Maytas Infra, Ansal Housing, Hindustan Construction Company, IVRCL Infra and Jaiprakash Associates have gained in the range of 17-64% in 18 May –19 June period, an analysis shows.
According to brokerage firm Edelweiss report an increase in funding for infra schemes like NHDP and Pradhan Mantri Gram Sadak Yojna (PMGSY), accelerated Irrigation Benefit Programme (AIBP) and Bharat Nirman among others is expected in the Union Budget.
The Union Budget would be presented by the finance minister Pranab Mukerjee on 6 July in Parliament.
The expected measures on infra-related sectors in the Budget would have an impact on construction firms due to “increased order inflow”, the Edelweiss report added.
Maytas Infra has been the biggest gainer climbing over 63% in the one-month period and is followed by IVRCL Infra (43%), Hindustan Construction Company (30%), Ansal Housing (31.6%) and Jaiprakash Associates (17.4%).
“Investors looking at a horizon of 3-4 years should definitely look at entering these stocks now,” Gupta said.
Similarly, stocks of realty firms including Akruti City, Sobha Developers, Parsvnath Developers and Omaxe have also surged in the range of 24-70% in the reviewed period.
In a recent report, Citigroup stated that public investment in agriculture and infrastructure, which has increased over past five years, would be stepped up further.
“The focus of the new measures would be to stimulate demand in the domestic economy and to ensure that there is more purchasing power in the hands of the people and more liquidity in the hands of companies,” it added.
Further, cement stocks have also gained about 30% during post-election rally with Shree Cement gaining 32%, ACC and Ambuja Cements gained 6%.
Analysts are upbeat about the infrastructure sector with the finance minister Pranab Mukherjee while outlining government’s plan of action said he would focus on infrastructure in the budget and reviving the economic growth was the government’s top priority.