Dalal Street Investment Journal – July 20, 2019

58 DALAL STREET INVESTMENT JOURNAL I JULY 22 - AUG 4, 2019 DSIJ. in^

Financial Review For FY19

Construction

I

n the previous decades, China was the fastest growing

economy in the world. The sustained high economic

growth coupled with increased competitiveness in

manufacturing can be attributed to the gigantic

development of physical infrastructure in China.

India seemed to have realised this and has started investing

heavily in improving and building physical infrastructure in the

country. The government has identified development of

physical and social infra as the first dimension of its 10 most

important dimensions that it has identified as part of its Vision

2030. This vision includes building and improving
      infrastructure of roads, urban transport, seaports, airports,
      railways, inland waterways etc. To turn this vision into reality,
      the government has allocated massive funds in the recent
      budgets.

The construction activity comprises of infrastructure, building

and construction. During FY2017-18, the road tender activity

reached all-time high of `1.2 lakh crore, but later the tendering

activity slowed down and in FY19 it fell to `45,000 crore.

However, the state highway awards acted as a cushion for infra

players.

According to one of the international property consultants,

housing sales in India's eight major cities (Delhi-NCR,

Mumbai, Chennai, Kolkata, Bengaluru, Hyderabad, Pune and

Ahmedabad) grew by nearly 4 per cent to 1.29 lakh units

during Jan-June 2019 owing to strong traction in demand for

affordable homes, while new homes supply grew by 21 per cent.

Notably, unsold inventories with the developers dipped 9 per

cent to 4.50 lakh units.

To analyse the trend in the construction industry, we have

taken into consideration 83 companies' financial performance.

The net sales of these 83 companies increased significantly by

nearly 18 per cent in FY2018-19 over the previous year. In

terms of net sales, the companies that reported stellar

performance were Jaypee Infratech, Parsvnath Developers and

DB Realty, whose sales jumped nearly 738 per cent, 370 per

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