Source: Business Daily

Driven by infrastructure spending, the demand side for construction companies remains robust. The key to success will lie in their ability to ramp up resources and capitalise on order flow.

Infrastructure has been the new market mantra the past two years. While private equity investors showed keen interest in infrastructure/construction companies, a number of mutual funds also jumped on to this booming bandwagon, investing a chunk of their assets in the sector. An annualised revenue growth of 30-40 per cent over the past three years and an average order size of three-four times the revenues also seem to justify this newfound enthusiasm. Do these factors indicate that this is a sector to be bought outright? A Business Line study suggests that while the sector will, no doubt, receive continued fillip from infrastructure spending in the country, a stock-specific rather than a sector approach is the right route to superior returns over the long term. We take a look at factors that not only distinguish some companies from the rest, but may also act as pointers to identify the better ones in the basket.

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Posted by pichu at October 29, 2006 8:13 AM