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Last Updated : Jan 01, 2020 10:21 AM IST | Source: Moneycontrol.com

Experts bet on 5 stocks as FM commits to Rs 105-lakh-cr infrastructure spend

Renu Baid of IIFL Institutional Equities also said it was definitely a positive move from government as there were concerns about infra capex and investment from government.

Sunil Shankar Matkar
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Infrastructure has been in focus in the last six years, and both the States and the Centre have spent Rs 51 lakh crore on infrastructure projects, which will be continued by spending more than Rs 100 lakh crore in the next five years, said Finance Minister, Nirmala Sitharaman, while addressing her last press conference for 2019.

She further said the task force of the National Infrastructure Pipeline (NIP) after holding 70 stakeholders' consultations on infrastructure investment in four months, recommended  investments of Rs 102 lakh crore.

The government will be adding Rs 3 lakh crore to Rs 102 lakh crore in two-three days, taking the total investment to Rs 105 lakh crore to boost the infrastructure sector, she said.

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Sitharaman also said that infrastructure projects are spread across 18 states and union territories.

The share of private sectors in infrastructure projects pipeline will be at 22 percent while that of Central and State governments will have 39 percent share each in National Infra Pipeline, she said.

"Projects worth Rs 42.7 lakh crore are under implementation, with 63 percent of the total infrastructure project pipeline has already been firmed up," Sitharaman said, adding that power, rail, renewables, urban, irrigation, mobility, water, heath and digital formed the bulk of the crore projects.

She said the private share in national infra pipeline at 22 percent would increase to 30 pecent by 2025.

"We are looking at various steps to reform PPP projects and dispute resolution. We are also looking at various steps towards the enforcement of contracts," she said, adding a robust monitoring framework will be established.

Experts feel this is definitely a positive move for not only infrastructure, but also construction and cement stocks.

"The big infra push by the government was expected since the Task Force had submitted its recommendations. What was awaited was the details of the funding and the initiatives to fix the issues in the PPP model and dispute resolution. The proposed infra spend spread across 18 states and union territories can be expected to give a fillip to revival of growth," V K Vijaykumar, Chief Investment Strategist at Geojit Financial Services told Moneycontrol.

He said from the market perspective, this was certainly a sentiment positive. Capital goods and infrastructure stocks will respond positively, he feels.

Renu Baid of IIFL Institutional Equities also said it was definitely a positive move from government as there were concerns about capex on infrastructure and investment from government.

"There could be near term hiccups about the timing, but from medium-to-long term, it is very strong move. In fact, this was requirement of the day from the government to give a push to the infrastructure sector," she added.

She said the move is positive for infrastructure companies like L&T, E&P firms etc, though there are still some challenges for next two quarters. "We need to see how the government will provide better environment for private companies and drive demand going forward."

"If we look at construction and infrastructure related companies, this step was on expected lines. We have to wait and watch the implementation," Sudip Bandyopadhyay, Group Chairman of Inditrade Capital told CNBC-TV18.

"Private sector participation has been pegged at 22 percent initially, which is supposed to go up to 30 percent by 2025. That will be the critical component as we have to wait and watch what kind of private sector participation comes in in terms of investment in infrastructure projects, considering the state of private sector and availability of credit to large corporates," he said.

Bandyopadhyay said that L&T, and other large road construction names Dilip Buildcon, Sadbhav Infrastructure etc will be on his radar.

He also said that cement, which have not done well in the last six months, have not been his favourite, but he would continue to remain bullish, and all this infrastructure spend would definitely percolate back to good performance in cement companies.

"Companies having capacities in the north and the centre would be attractive, considering the supply-demand status there. The possibility of having an upper hand as far as pricing is concerned, JK Cement, HeidelbergCement will definitely on my radar," he added.

Several infrastructure stocks reacted to the news, which came in late trade on December 31. IRB Infrastructure, KNR Constructions, Dilip Buildcon, Ashoka Buildcon, PNC Infratech etc gained up to 7 percent.

Disclaimer: The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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First Published on Jan 1, 2020 10:20 am
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