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Wednesday, Jun 09, 2004

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Construction stocks back in the reckoning

Amit Mitra
Virendra Verma

Mumbai , June 8

ENGINEERING and constructions companies are back on the buy list of the market players on the back of good order positions by these companies and the new Government's thrust on infrastructure.

Some of the stocks that are on the rise are Era Constructions, Valecha Engineering, IVRCL Infrastructure & Projects, Gammon India, and Hindustan Construction.

Brokers said that these stocks are being accumulated due to the good order positions.

The interest is seen more in small and medium-sized companies like Era Constructions, Valecha Engineering and IVRCL Infrastructures. For instance, the Era Construction stock has gained 68 per cent since the beginning of May from Rs 37 to today's closing price of Rs 62.30.

During the same period, Valecha Engineering has risen by 49 per cent from Rs 67 to Rs 100.40.

In today's trading, IVRCL Infrastructure gained 2.04 per cent to end at Rs 187.60, while Gammon India increased by 3.42 per cent to close at Rs 329.90.

Analysts said that with the new Government laying thrust on infrastructure development, prospects of engineering and construction companies having been looking up, especially from the long-term perspective.

Soon after taking charge, Mr T.R. Baalu, the Minister for Shipping and Surface Transport, made it clear that infrastructure will be built rapidly and, if needed, policies would be changed to accelerate the pace of development. Valecha Engineering has bagged projects worth about Rs 300 crore, mainly in the road development sector. The company was recently awarded a Rs 90-crore highway project as part of the Golden Quadrilateral project by the National Highway Authority of India (NHAI), envisaging construction of a stretch of 150 km of highway between Satara and Kolhapur.

Similarly, Era Constructions has bagged a contract for the construction of 2x500 MW Super Thermal Power Plants for NTPC at Vindhyachal and Kahalgaon. Till date, it has been awarded power projects to the tune of Rs 300 crore from NTPC.

IVRCL has bagged the $15.7-million Narmada Canal Distribution Network Project from Gujarat Water Supply and Sewage Board for the Rajkot district water supply scheme funded by Nabard.

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