Cautious on infra, construction, go for cement names: Gautam Trivedi, Religare Capital Markets

In a chat with ET Now, Gautam Trivedi, CEO, Religare Capital Markets Ltd, shares his views on the construction sector. Excerpts:

ET Now: What are you advising your clients to do with construction space? Here I am not just talking about Larsen & Toubro, but also about mid-sized construction companies. When is the right time to start selecting stocks from this space?



Gautam Trivedi: In you look at the intraday trades on Monday, you would probably feel that all the debt issues, companies from this sectors were facing, have gone away. Unfortunately, the truth is that nothing has changed. Even now, most institutional investors are careful about putting incrementally new money in companies with high-debt problems. It does not matter when they are from infrastructure space or construction sector. Till the time, the debt problem is solved, they are not going to be preferred picks. There has to be a resolution to the debt problem. For example, Jaiprakash been fairly successful in shedding assets. It may continue to do so, until the company reaches a comfortable debt level. Having said this, honestly there is no quick fix to the debt problem.

Instead of infra and construction companies, focus on cement or ancillaries industries. These sectors would be benefited from infrastructure spend.