The Hindu Business Line : Construction cos under cost pressure?

Another sector that currently does not find much optimism among marketmen is the construction industry. Analysts maintain that with cost pressure high, working capital requirement has been on the rise. As such, there is fear of continuous equity dilution. In other words, the more orders they secure, more the pressure on working capital cycle. With price of commodities such as steel, cement etc on the rise, margins are being squeezed.

Industry watchers said that profit grows but the profitability is coming down. Brokers said that at these levels, valuations look stretched. The stock of companies such as IVRCL, Gammon India, Nagarjuna Construction, Hindustan Construction etc closed weak on the BSE on Wednesday .

The stock of Gammon India ended at Rs 387.20 down 2.87 per cent on the BSE while IVRCL ended lower by 1.64 per cent at Rs 281.65, HCC at Rs 122.15 down 1.29 per cent and Nagarjuna Construction at Rs 175.

Deeptha Rajkumar

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