Strong order book builds up prices of construction stocks

Mumbai, March 28 | Updated: Mar 29 2005, 05:30am hrs
Following a rise of 67.9 points in the Sensex, most construction stocks ended on a positive note. A strong order book, leading to expectations of good fourth-quarter results, also led to a surge in buying interest in the stocks of construction companies.

Major construction stocks like Nagarjuna Construction Company (up 14.11% at Rs 571.85), Hindustan Construction (up 7% at Rs 455), Valecha Engineering (up 4.89% at Rs 143.85), JMC Projects (up 4.97% at Rs 86.55), Patel Engineering (up 3.83% at Rs 196.50), Madhucon Projects (up 3.21% at Rs 734.6), Jaiprakash Associates (up 3.69% at Rs 199.75) and Larsen & Toubro (up 3.71% at Rs 1,009.6) posted gains. L&T was the highest gainer among the Sensex constituents.

IVRCL Infrastructure was up 8.22% at Rs 471.3. The company, which recently concluded its second initial public offer (IPO), has priced the offer at Rs 395 a share for all categories of bidders. IVRCL also topped the volumes chart on BSE with 2.03 lakh shares followed by Jaiprakash Associates in which 1.9 lakh shares changed hands.

Analysts attribute the rise to a strong order book and the Centres thrust on infrastructure and rural development. Construction and heavy engineering companies received a major boost in the Budget 2005-06. Most companies have a strong order book that will also lead to a good fourth quarter result, said a research analyst tracking construction and mid-cap stocks.

Road projects and rural infrastructure projects received a major focus in the current Budget. The outlay on road projects has been hiked to Rs 19,000 crore from Rs 15,440 crore. Also, liberal FDI norms in the real estate and construction sector is leading to a further surge in construction activity.