Infrastructure space continue to underperform: N Shah

Nilesh Shah of Envision Capital is of the view that infrastructure space is continued to underperform foe maybe another 6-12 months.

Shah told CNBC-TV18, "Infrastructure sector has come down to significantly battered down levels. It’s a segment which is significantly oversold. One has to keep in mind that one might see some kind of a bottoming out process happening in the sector. It’s not necessary that there is no downside from current levels to these kinds of stocks; one could still have a downside. I think the management have not been transparent, they have not been followed probably the best of management practices. So these are also some of the issues which are dogging the sector as well as the stocks apart from of course the fundamental outlook on these stocks. I think till a point of time we do not see bond yields coming out, inflation peaking out and the fact that there is going to be enough liquidity available for their end customers to basically again pickup the momentum in their project. I think the sector will continue to kind of underperform for maybe another 6-12 months."

He further added, "In addition to that one have to also keep in mind that this sector is significantly over owned between the period of July to December last year, the sector which did extremely well was infrastructure; we have seen lot of capital issuances happening and I think now one is seeing a lot of unwinding happening and that’s a process, which I think will not completely over. I think there is long-term value which seems to be emerging from the sector but I am not too sure whether the sector is completely out of the woods."

Disclosures: It is safe to assume that analyst and his clients may have an investment interest in the above stocks/sectors.