Infrastructure - Earnings likely to be supported by performance of L&T - Angel Broking

We expect our coverage infrastructure companies to post a moderate earnings growth of 4.6% yoy, mainly supported by the performance of Larsen & Toubro (L&T). Excluding L&T, the earnings are likely to continue remaining under pressure and we expect an earnings decline of 7.0% yoy for the remaining infra companies in our coverage universe. We attribute the dismal earnings performance during this quarter as well to persistence of headwinds facing the sector such as a high interest cost, inflationary cost pressures, stretched working capital and delays in payments from clients.

We continue to maintain that a stock-specific approach would yield higher returns, given the disparity among the companies in our coverage universe. Hence, we remain positive on companies having 1) a comfortable leverage position; 2) superior return ratios and 3) less dependence on capital markets for raising equity for funding projects.

Source : Equity Bulls

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