Construction companies surge up to 15 per cent as government plans infra push

MUMBAI: Shares of infrastructure and construction related companies gained momentum in trade after the government announced increased spending in the sector.

The government will increase investment in infrastructure up by Rs 700 billion 2015/16 over last year. It plans to set up national investment infrastructure fund, proposed tax-free infrastructure bonds for projects in roads, rail and irrigation projects and build additional 100,000 km of roads.

“The budget was positive for the Utilities and Infrastructure sector. Focus on distribution reforms and accelerating investment in infrastructure verticals like Roads, Ports and Railways is key highlight, in our view. While exact framework on implementation and details may follow, the intent on revival of Utilities and Infrastructure sector is clearly evident,” said Motilal Oswal report.

According to CLSA report a 75 per cent rise in roads, 33 per cent rise in rail and 25 per cent in PSU capex were the corner stone of the government’s FY16 budget.

According to the brokerage Rs 200 billion contribution to National Investment & Infra fund, tax free bonds for road, railway & irrigation sector, Change in PPP format to reduce traffic risk, and 4) 5 x 4GW UMPP projects with plug-n-play execution are positives for the infrastructure sector.

It has maintained Buy on L&T, Adani Port and SEZ, Adani Enterprises and IRB Infra.

At 10:00 a.m.; L&T was up 2.6 per cent, IRB Infra gained 3.41 per cent, Adani Port and SEZ was 1.01 per cent higher, Ashoka Buildcon rallied 14.73 per cent, HCC was 3.80 per cent higher and KNR Construction sureged 7.22 per cent.