Infrastructure is one sector which is the biggest beneficiary since Narendra Modi came to power this May. The ease of doing business increased dramatically after the elections. Not only that, even the financial condition of these firms has improved quite a bit. As an article in Business Standard points out, the combined debt to equity ratio of the top 17 infra companies has declined to 3.5x in FY14 from 3.7x in the previous year. Fund raising and non-core asset sales have helped these companies improve their financial health. With the investor appetite failing to wane amidst the promise of ache din, it appears that the balance sheet of these companies may improve further.
So, should investors lap onto them? Well, not , in general. High working capital, huge debt and wafer thin margins makes infra as a business quite susceptible. Bureaucracy adds another layer of susceptibility. Though bureaucracy may not be a big worry now with Mr Modi assuming power, financial risks remain. Hence investors should be careful while investing in them as the current euphoria may be short lived.
So, should investors lap onto them? Well, not , in general. High working capital, huge debt and wafer thin margins makes infra as a business quite susceptible. Bureaucracy adds another layer of susceptibility. Though bureaucracy may not be a big worry now with Mr Modi assuming power, financial risks remain. Hence investors should be careful while investing in them as the current euphoria may be short lived.
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