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Shares of construction companies were in focus with most of the stocks from the sector trading higher by up to 7% on the BSE in otherwise subdued market. KNR Constructions, Sadbhav Engineering, Simplex Projects, MBL Infrastructure, Hindustan Construction Company (HCC), Punj Lloyd, Gayatri Projects and Ramky Infra were more than 2%. On comparison, the S&P BSE Sensex was down marginally by 0.03% at 33,766 points at 11:41 AM Gayatri Projects was up 3% to Rs 221 in intra-day trade after the company announced that has secured Rs 1,339 crore contract in joint venture with ‘Public Joint Stock Company ' Kyivmetrobud' i.e Gayatri-KMB (JV), from National Highways Authority of India (NHAI). The contract is for construction of standalone ring road/bypass around Jammu city in the state of Jammu and Kashmir. For the road sector, which has plausibly looked up in recent times, the Governments infra development focus including the Bharatmala project announcement is nothing short of a booster shot, according to IIFL Wealth Management. A whopping Rs 6.9 trillion project outlay spanning FY18-22 includes Bharatmala Phase I of 24,800 kms, existing NHDP program of 10,000 kms and road development of 48,877 kms under other schemes. Post the announcement, NHAI has revised its FY18 road award target from 6,500 km to 10,000 kms and its project pipeline is worth more than Rs 50,000 crore of projects, bids for which must be submitted by January 2018.
The project pipeline by NHAI is driven by high ticket size projects which would mean around 50% rise in value of projects in FY18 even if awarding on km basis stood nearly flat yoy. Although project implementation would be critical given past challenges like Land acquisition, the gigantic outlay is a massive business opportunity for developers in this space with average annual road awarding of more than 16,000 kms. Key beneficiaries include Sadbhav Engineering, Dilip Buildcon, PNC Infratech and KNR Constructions, the brokerage firm said in recent report on road and highways. Meanwhile, KNR Constructions, Sadbhav Engineering, Gayatri Projects, NCC and Welspun Enterprises have hit their respective 52-week highs on the BSE in intra-day trade today.
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