Among the smaller companies in the infrastructure space, road player MBL Infrastructures is well placed to gain from the improving outlook.
For one thing, MBL Infra has not followed an aggressive strategy unlike some of its peers. In the build-operate-transfer segment, the company has four road projects under implementation.
Two of these have a relatively lower risk, being on an annuity model, where the road developer receives fixed half-yearly payments from the state or national highways authority and is not subject to the volatility of traffic flow.
MBL has one completed BOT project on which it is collecting tolls.
The other BOT projects will become operational over the next few months.
The second reason MBL is well placed to grow is because it simultaneously undertakes pure construction of roads on a contract basis, or as EPC (engineering, procurement and construction) projects for third parties.
Thirdly, MBL is an early mover in operations and maintenance of completed roadways, a segment with strong potential and accounting for 15% of its order book.
Fourthly, MBL has diversified from roads into segments such as railways, where there are now many opportunities.
Industrial and residential buildings are the final segment MBL operates in. The company is now looking into booking construction contracts in port development and connectivity through joint ventures.
Thanks to its EPC business, MBL sales have been growing.
Over the past 4 years, revenues have grown over 15% on a compounded annual basis. In December, 2014, MBL Infrastructure Ltd managed to raise Rs.117 crore in equity through institutional placements balancing its heavy debt to an extent.
The investors are suggested to accumulate the scrip of MBL Infrastructure Ltd on declines.
3. BHEL recommended around Rs.106.15 in March, 2016 has already given more than 40% return during this period. Short term investors can hold the scrip with a SL of Rs.136-131.
4. Those who have booked short term profit in Jai Corp Ltd around Rs.75, should wait to see if it breaks Rs.72 and comes down to Rs.67-69, for taking fresh positions.
5. Those who are holding the shares of Reliance Communications Ltd (47.10) should accumulate as much as possible. The rally in RCom will probably start post Deepawali.
This company is now virtually merged with RJio, apart from its formal merger with Systema and Aircel. "The spectrum auction did not attract any bids for the highly expensive 700 MHz band, implying that Reliance Jio Infocomm Limited (unrated) and Reliance Communications Limited (Ba3, review for downgrade) -- which have a spectrum-and-infrastructure sharing agreement -- will remain the only players with access to pan-India spectrum in the sub 1 Ghz band," a recent Moody's report said. "Longer term, the spectrum which the operators secure will help them maintain their competitive positions, support their strategies on data growth and enhance cash flow generation.
Their high debt burdens may also pave the way for recapitalisation events and further industry consolidation, which will in turn ultimately benefit those incumbents well positioned in 4G," the report noted.
It is now a massive company and it is your sheer luck that you are getting the shares of RCom at dirt-cheap price of Rs.47-48. Aggressive investors can sell gold/real estate and invest in the stock.
6. Vedanta Ltd (Rs.203) recommended around Rs.60-62, has given a stupendous returns to patient investors. The long term investors can still hold the stock for targets of Rs.217-221, SL: Rs.191.
7. Those who are still holding the shares of Gitanjali Gems Ltd (Rs.78.79), can book some profit and hold the rest with a SL of Rs.75.
8. Those who are holding the shares of Shrenuj & Co Ltd (Rs.2.85) can continue to hold till Deepawali, with a SL of Rs.2.70.