A construction site at the East Kidwai Nagar General Pool Residential Accommodation Redevelopment Project in Delhi. Photographer: Ruhani Kaur/Bloomberg

Analysts Expect These Beaten-Down Infrastructure Stocks To Give Best Returns

The top four Indian stocks with the maximum return potential are infrastructure and construction companies.

Shares of J Kumar Infraproject Ltd., Dilip Buildcon Ltd., NCC Ltd. and Sadbhav Engineering Ltd. tumbled 25-50 percent in the last three months among companies tracked by at least 10 analysts, according to Bloomberg data. The Nifty 500 declined 4.6 percent during the period.

The stocks may have fallen on the perceived risk of adequate bank funding for projects, according to a note by Elara Capital. Yet, it said the fundamentals of the four companies remain healthy due to a strong order book which provides visibility to their revenues and progress on financial closure. “The recent correction could be an opportunity to add quality stocks.”

Analysts are optimistic about the return potential of these companies.

  • Citi is positive about J Kumar Infraproject Ltd. because of its order wins and a “healthy backlog”.
  • NCC Ltd., according to HDFC Securities, has a “robust execution and stability in operating margins”.
  • Kotak Institutional Equities said Dilip Buildcon Ltd. is better placed to gain market share, while acknowledging its future challenges.
  • Anand Rathi is positive about Sadbhav Engineering Ltd.'s realisation of advances with projects in the second half of FY2018-19.