PNC Infra, Ashoka, IRB share price decline 3-9% in 2 trading sessions: Should you Buy, Sell or Hold the stocks?

Stock Market Today- PNC Infratech , Ashoka Buildcon , IRB Infrastructure Developers KNR Construction share price among others though may have declined up to 3-9% in last 2 trading sessions due to weakness in the markets , however are still at trading  33-68% higher year to date.

The government impetus to Infraprojects has led to improved order book and earnings prospects for road construction majors as PNC Infratech , Ashoka Buildcon , IRB Infrastructure Developers among others . While some slow down in order inflows prior to Lok Sabha Elections had led to impact on order inflow growth, the trend is likely to catch pace now.

Order inflow improving after weak Q1

The NHAI could not award any new road projects in Q1FY25 said analysts at Nuvama Institutional Equities, which they attributed to imposition of the model code of conduct related to the general elections. In July-24, nevertheless Nuvama data suggests that road construction rose 21% year on year to 291 km and year to date road construction at 1,135km is up 5% YoY. NHAi Plans 5,000km of new roads during FY25.

Rating Agency ICRA also has said that Order book position of entities is likely to remain adequate, despite momentary dip in order inflows in Q1 FY2025 amid General Elections

Positives and concern areas

Now, with elections concluding, analysts reckon that the approval for the revised cost of the Bharatmala project shall come, leading to a pickup in project awards. However, a muted 3% YoY increase in road capex during the Union Budget for FY25 is watched carefully and concerns on rising competition remains. A pause in interest rate hikes by the RBI, improving asset monetization by the road ministry as well as the improved credit availability from banks are notable encouraging factors as per analysts.

Operating leverage may help road constriction companies

The momentum in order flows and execution is looked as positive drivers considering governments infra push. The same is looked at offsetting concerns on heightened competition.

ICRA Ratings while says that competitive intensity has increased across all the key segments and prices of key commodities may also see an upward trajectory during FY2025. However, they say that adequate order book to aid revenue growth in FY25 while operating margins are expected to remain stable.

Preferences- Analysts at Nuvama prefer road companies with robust balance sheets such as PNC Infratech. Those at Axis Securities on the other hand prefer PNC Infratech Ltd, HG Infra Engineering Ltd, J Kumar Infraprojects Ltd.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions