Dalal Street Investment Journal – July 20, 2019

DSIJ.in JULY 22 - AUG 4, 2019 I DALAL STREET INVESTMENT JOURNAL (^59)
cent and 205 per cent, respectively. Besides, the large cap
companies that posted strong set of sales in FY19 were Oberoi
Realty (104 per cent sales growth) and Godrej Properties (76
per cent). However, there were companies like Ganesh
Housing, Man Infra and Kolte Patil Developers whose sales
dipped nearly 45 per cent, 43 per cent and 38 per cent,
respectively.
The aggregate operating profit for all the 83 companies grew
nearly 15 per cent yoy in FY19 to 58368.21 crore from 50732.40 crore in the previous fiscal. The companies that
outperformed in terms of operating profits are Ramky
Infrastructure (1568 per cent yoy growth), Shriram EPC (302
per cent growth), Bharat Road Network (297 per cent growth)
and Hubtown (271 per cent). Notably, there were companies
that witnessed turnaround in operating profit viz. Vascon
Engineers, A2Z Infra and Jaypee Infratech.
The aggregate net profit of all the companies grew marginally
by 5 per cent yoy in FY19 to 14,561 crore. The companies that outshined in terms of net profit were Gayatri Projects and NCC, whose profit surged 593 per cent and 295 per cent, respectively. Also, companies like Elpro International and KP Energy too reported exceptional gain in profit owing to lower base of the previous year. However, on the other side, Bharat Road Network reported loss in FY19 as against profit of 85.82 crore in the previous fiscal.
In the recent budget the government has decided to spend
nearly 3.1 lakh crore on transport sector as against2.7 lakh
crore in the previous fiscal. Of this total investment, the
allocation for road sector is around 1.5 lakh crore, while the allocation for railways is1.6 lakh crore. The government's
thrust to build and improve infrastructure in the country can
be identified from these enormous spending for the infra.
Besides, with increasing urbanisation in the county, the
government is also focusing on projects like Metro rail, Smart
Cities and AMRUT. The government has allocated investment
of nearly 18,500 crore for metro rail projects, while the allocation for Smart Cities and AMRUT is expected to be 13,750 crore.
In terms of real estate segment, in the Union budget, the area
for affordable housing project has been increased from 30 sq.
metres to 60 sq. metres for metro cities and from 60 sq. metres
to 90 sq. metres for non-metros cities. Notably, the government
has announced interest tax benefit on housing loan, deduction
of 1.5 lakh has been allowed in computation of taxable income for interest payable on loan availed in addition to2 lakh
already available. Considering the government's impetus for the
sector as reflected in terms of enormous investment announced
in the Union budget, the construction sector is likely to be
lucrative for the investors.
Companies with low leverage balance sheet
Company Name D/E (x) Fixed Asset Turnover (x) Interest Cover(x) PATM (%)
GeeCee Ventures -   6.10 1,413.70 15.20
NBCC -   52.80 6.60 5.40
GE Power India -   5.90 3.70 4.00
Eldeco Housing & Industries 0.00 6.30 19.60 23.30
Ahluwalia Contracts 0.00 12.20 8.00 7.00
Techno Electric & Engineering 0.10 1.90 11.70 15.50
Shervani Industrial Syndicate 0.10 6.70 515.50 32.10
PSP Projects 0.10 7.30 12.00 8.80
Mahindra Lifespace Developers 0.10 5.90 6.70 7.80
Housing Development & Infrastructure Ltd. 2.92 0.20 1.17 24.67
Data as on FY19
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.