One must focus on road construction companies: Sandip Sabharwal

In a chat with ET Now, market expert Sandip Sabharwal shares his views on the construction companies.


ET Now: How are you participating in the midcap space. Give me an idea where after 50 per cent run up also valuations are not looking stretched and you were a buyer?

Sandip Sabharwal: All these stocks which we earlier discussed like a company like Crompton Greaves where there is a clear turnaround happening. The stock ran up 70-80%. It has given up 15 per cent odd from the top, it might give up some more. These are the kind of stocks one would play for.

The other big play one should make for the next five years in my view is all these road focused construction companies, companies like IL&FS infrastructure, IRB Infrastructure, Sadbhav Engineering which are focused on the road segment; because the road project was a pet project of the NDA last time.



ET Now: That is like playing dangerously none of these companies have a good balance sheet?

Sandip Sabharwal: The balance sheet is not as bad as most other infra companies. To that extent and given the fact that some of the projects annuity, some of the projects are BoT, one would think that on the BoT project the traffic run rates will also improve as the economy improves.

So my guess is these stocks are still quite depressed in terms of the option premium one would say that could play out over the next few years and I would actually take a bet on a combination of these stocks.