Workers level a newly constructed stretch of road in New Delhi, India (Photographer: Amit Bhargava/Bloomberg News)  

These Road Stocks Are Trading At Relatively Cheap Valuations

These Road Stocks Are Trading At Relatively Cheap Valuations

The recent correction in shares has made road builders attractive.

Four out of the top five road and highway construction stocks by market value have corrected an average 25 percent from their peak, bringing their valuation below the industry average, according to Bloomberg data.

This despite analysts forecasting an average 30 percent return potential. “A strong order book gives these companies revenue visibility for the next two-three years,” Mayuresh Joshi, fund manager at Angel Broking told BloombergQuint by phone.

Moreover, he said there has been an improvement in the rate of returns after the companies shifted to hybrid annuity model. “The government’s infrastructure push adds to our bullish view.”