A general slowdown in construction activities has hurt financials of infrastructure companies alike. In one such instance, Gammon Infra has disappointed street with a net loss of Rs 1.7 crore for June quarter on higher interest cost and lower margins.
The firm which is largely dependent on government-backed highway projects and privately-held orders too has reported muted sales growth at Rs 156 crore Read This: Gammon Infra gets financial closure for five road projects
Despite the scenario unlikely to improve in short term, Parag Parikh, ED & and CFO, Gammon Infra is confident of doing Rs 1,000 crore revenues in FY14. “We are in advance stage of completing toll bridge alongside Godavari river and our Patna Road project is also expected to be completed by March,” he told CNBC-TV18.
Gammon has achieved financial closure of its key projects including Vijayawada Gundugolanu Road, Gorakhpur bypass and Sidi-Singrauli stretch, but again high interest cost is a big concern.
Meanwhile, for having Rs 1,000 crore revenues by March next year, the firm has to do net around Rs 250 crore revenues each quarter which seems challenging with big ticket orders being hard to come by and those in kitty need to be completed on time for this kind of sales growth.
Analysts have also maintained a cautious stance on the sector overall in short-term. Despite the government easing policy decision and fast-track clearances for several projects, the upcoming scheduled elections in the next 15 months could delay reforms.
Brokerages also anticipate an around 20 percent decline in collective order book of infra companies in FY14 and those up for grabs will be eyed by companies aggressively.
Gammon Infra has declined around 39 percent in the past one year to Rs 7.70 on fundamental sector-related issues.
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