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Small is beautiful

Mid-sized infra players make hay as leveraged biggies continue to flounder

Manoj Sinha

It’s a study in contrast, if one were to look at infrastructure stocks. Of the 198 listed infrastructure companies, the behemoths continue to be out of favour, while the Street seems to be taking fancy to small- and mid-sized companies. 

Vibhor Singhal, who tracks the sector at PhillipCapital, says, “The market is no longer rewarding companies with a huge order-book unless they have a strong balance sheet. This is also why small- and mid-cap companies with good balance sheets are bagging fresh orders as the bigger players, due to their weak low cash flow, are staying away from fresh bids.”

Leading infra names such as GMR Infra, GVK, JP Associates, Gammon India, Lanco Infra, Punj Lloyd, and Reliance Infra have, on an average, eroded 44% of their market cap over the past three years. This is against the 500% return generated by small- and mid-cap companies such as Sadbhav Engineering, NCC, ITD Cementation, Gayatri Projects, KNR Construction, J Kumar Infra, and IRB Infra. 

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