Infrastructure – Look beyond a quarter

Over the years, India has been experiencing power deficits, an inadequate road network to support the ever-burgeoning vehicular traffic, ports serving as bottlenecks, and so on and so forth. However, it is imperative that the growth of the human population is accompanied by a matching growth in the underlying infrastructure (at the minimum), if not more. When this does not happen, it starts to have a draw-down effect on the overall growth of the economy. Considering this, investment in infrastructure has been the focal point in recent years, as realisation dawned on the government that inadequate infrastructure has been withholding India's growth and deterring foreign players from investing in the country. Therefore we believe that Infrastructure sector is an ever shining theme for reasons mentioned above. However, the stocks in the Infra space have witnessed a battering over the past few weeks mainly on account of disappointing set of results, which in part can be attributed to the ongoing Telangana (AP) crisis leading to delay in execution due to various reasons. We believe that an Infrastructure Company’s performance should not be judged from only from quarterly performance but a macro view needs to be taken while betting on them as the inherent nature of the business is lumpy and prone to delays. Thus, the current correction is an opportunity for long term investors to play on the ever shining infra theme in India.

By Shailesh Kanani,Sr.Research Analyst-Infrastructure & Real Estate, Angel Broking