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Last Updated : Apr 17, 2019 09:49 AM IST | Source: Moneycontrol.com

Infra Q4 preview: Earnings to be subdued due to higher finance costs

Anand Rathi is expecting the companies to post 17 percent YoY revenue growth for Q4

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The earnings performance from the infrastructure companies is expected to be subdued in the fourth quarter due to higher finance costs and receding 80-IA tax benefits, Anand Rathi said in its infrastructure review report.

Research house is expecting the companies to post 17 percent YoY revenue growth for Q4, largely on the 17 percent YoY growth in EPC revenues and 15 percent from other segments.

Besides the slowdown in economic activity, cessation of concession agreements (particularly for Ashoka Buildcon and MEP) are likely to have got growth down, said Anand Rathi.

With the code-of-conduct coming into force, government awards were halted or delayed. Regardless, Q4 revenue growth is likely to have been strong as most in this space have enough in place for growth in the medium term, the brokerage house said.

The key monitorables to gauge the larger space are securing appointed dates for the closed hybrid annuity projects, the required scaling-up to deliver on these augmented order backlogs and fund and non-fund based limits for the growth opportunities, said Anand Rathi.

With overall awarding at Rs 3.3 trillion in FY19, it has more or less been at par with the previous year's level and contrary to the wider perception of weaker awarding this year. It could have been higher, but after a strong Q3, Q4 awarding declined 41 percent QoQ, it added.

Ahluwalia Contracts, KNR Constructions and Ashoka Buildcon are the top picks from the sector.
First Published on Apr 17, 2019 09:49 am
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