MUTUAL FUND ANALYSIS

Investing in infrastructure funds

With the completion of
the Seventeenth General
Elections and re-election of the
incumbent party at the Centre,
the key positive takeaway is
consistency in economic
governance framework for the
next five years. Most
importantly, a comfortable
majority also ensures no
impediments of coalition
pressures in case of tough
decisions for long term growth.
Therefore, attention shifts to
areas of focus for the next five
years, which can be gauged
through the manifesto of the
BJP. The broader takeaway is
the manifesto envisages
inclusive growth spanning
infrastructure, rural/agri
population, industries and basic
necessities such as housing
and healthcare that could be a
catalyst for a decade of robust
economic growth ahead.

Infrastructure remains the key
thrust area of this government
with focus on Railway, road & air
connectivity, housing, etc. Most
diversified funds are linked to
the consumption or financial
part of the economy in which

most stocks are richly valued.

Infrastructure funds offer a

good diversification to the

diversified funds.

The government's manifesto

envisages overall infrastructure

investment to the tune of 100 `

lakh crore by 2022, implying

annual investment of 20 lakh `

crore. To meet this, we believe

the government will have to

step up tendering & awarding

activity exponentially from 9.6 `

lakh crore & 3.3 lakh crore, `

respectively, in FY19. This could

offer huge opportunities to EPC

players and could see a

doubling of the order book from

the current level over next three

years.

In terms of verticals, it plans to

construct 60,000 km of National

Highways in the next five years.

In our view, the major

component of 60,000 km would

involve Bharatmala 1.0 and

balance road work under NHDP

aggregating 34,800 km at an

estimated cost of 5.35 lakh `

crore. EPC players could reap

good benefits from this

opportunity.