Do you have these midcaps in your portfolio?

Excerpts from Midcap Radar on CNBC-TV18 Watch the full show » ALSO READ See what other experts are saying about markets See what FIIs are saying about the markets See what Udayan Mukherjee is saying about the markets ITD Cementation BSE | NSE 09/02/12 Are Mutual Funds betting on ITD Cementation? Other Stocks in this news Tantia Constructions | Unity Infraprojects |

Rupa Shah , Research Analyst of Finquest has a view midcap companies like ITD Cementation have lot of potential ahead because they have certain benefits like their balance sheets which are much stronger than before and they are also entering into new areas like BOT's, Airports, Urban Development.

Excerpts from the exclusive interview with Rupa Shah:

Q: You seem to have an aggressive target on ITD Cementation at Rs 503, what is driving the growth for the company?

A: ITD Cementation is a holding company of ITD Thailand, which is a renowned company in Southeast Asia for aspects of construction.

Three years ago, this company was facing some problems due to low and scattered order book, which is now healthy at around USD 29 billion. The order book is scattered into 3-4 big segments; the first comes from the Delhi Metro Rail Corporation where it has 55% of its order book, the second is from irrigation and the other two like piling and mining are also great asset for this company.

Q: Could you give your broad overview on this sector in the midcap space? Is it becoming more of play on order book?

A: These midcap companies have lot of potential ahead because they have certain benefits like their balance sheets which are much stronger than before. Secondly they are entering into new areas like BOT's, Airports, Urban Development.

They all also have location benefits and good projects from local governments. So with increasing order flows from government, we see an investment of USD 1000 billion per annum for the next five years.

All the large companies have their order books at high levels and somebody has to execute these orders, which are going to flow at a faster rate, and so I think these orders are going to tickle down to these midcap companies. From all these benefits their margins would be more or less sustained.

There is a big gap between the larger players and the midcap players, which has to be narrowed down in future.

Q: You like Tantia construction ?

A: This is a well renowned company in West Bengal and Eastern parts of India. It has lot of potential because it has a diversified order book and not into common areas like irrigation etc. It has ventured into Urban Development apart from roads and also entering into new areas like airports, transmission line, tunneling, ports. All these areas have growth potential. For eg there is going to be 500 metric tonne addition in the next 2-3 years for ports. All these above benefits will flow down to companies like Tantia Construction.

Q: Unity Infraprojects ?

A: This company is focused more on civil projects. With the real estate and realty boom, this company will benefit in the longer run.

It has an order book of 20 billion of which 70% is from irrigation, 25% from water related transport and the rest is in roads.

Most importantly this company doesn't not have chunk of its order book in roads, which have comparatively lower margins than other segments. So because of this their margins are going to improve in future.

They also have good BOT real estate story in their hands in cities like Mumbai, Nagpur and Pune. They are also developing first of its kind IT Park in Goa. All these BOT projects will add value in the future.

Q: Disclosures?

A: My clients or I, don't hold positions in these stocks.