Building Blocks of India
Index : 1,670 | 1Yr : +30% | 1Mo : -0.68%
Category : Sectoral Trackers
Min Investment : 1,022
Needless to say, construction is a basic requirement to meet the needs of a growing economy. There are many factors which work in favour of the construction industry like the urgent need for public infrastructure, commercial buildings, housing and sanitation. The demand for these has always existed but the policy makers in the past neglected to plan the execution. Now, with the recent government plans like Make in India, Smart Cities Mission, Swachh Bharat Mission and Housing for All. the construction activity in India is expected to increase multi-fold in the foreseeable future. It contributes around 8% of the GDP and the figure is expected to rise on the back of the government's increased budget allocation for infrastructure spending. The industry is the second highest employer after agriculture.
The success of these companies will depend on the growth of real estate sector, timely completion of projects, co-operation from the government & bureaucracy, cash flows and nimble debt management measures. A renewed approach to Public Private Partnerships (PPP) and tax sops will boost the industry significantly. Cost factors like raw material (steel & cement) and labour prices impact their profitability and growth.
Invest in well researched companies at relatively reasonable valuations which have managed their financial resources well and have a significant foothold in this space.