Construction Boom

Construction companies are stealing the limelight. No wonder considering the fact that there is lot of emphasis on building world class infrastructure to support the growth in the overall economy. Many small constriction firms are bagging huge projects turning themselves many times richer over night. Since the time the global companies have identified India as a good destination to invest and outsource their business, there has been no looking back for construction sector. There are many projects coming up like new airports, building, townships, new energy development plants, lot of gas pipelines are being laid all over the country, high ways are being build to connect different parts of townships. All this augurs well for the construction sector, which has been growing at a scorching pace.

As for the negatives, these companies work under lot of government regulations. There are about 42 clearances has to be taken from around 13-14 government agencies. Another constraint is the rising prices of real estate. But these are the petty issues that act as the hick ups for construction sector. The most important thing that makes a construction company good for investing is the quality of its work.

But a revolutionary process for speeding up construction work will definitely take even the hardy metro citizens by surprise. This is because the process of using pre-engineered buildings (PEBs), which promise to drastically cut down any structure’s construction time, is finally making inroads in the country’s booming real estate sector.

In fact, using this technology, developers can now set up malls, multiplexes and factories in record time.

As against conventional buildings which are developed using construction materials on-site, PEBs allows for the entire structure to be fabricated first in a factory and then transported to and assembled at the construction site. The pre-fabrication saves a lot of time. So if a regular conventional structure takes a year to make, PEBs would complete the project in five months flat. A brand new future for rapid construction seems to be the forecast for the industry.

This concept is already quite popular in Europe and America. In India, PEBs already account for 5% of the $12 billion Indian housing and construction industry.

What type of construction activity the company is engaged in gives an idea about its profit margins as most of them have different margin of profits. But the most important part is the valuation of the company. The investor should evaluate the fundamentals of the company carefully.

Some of the reputed companies in the sector are Larsen & Toubro, Gammon India, Simplex Infrastructures, Parsvnath Developers, Jaiprakash Associates, Patel Engineering, Sobha Developers, , Peninsula land, HDIL, Prajay Engineers Syndicate and Arihant Foundations & Housing and a few more. There are some companies which are not yet listed in the market but are doing really well in the construction sector. Example, Shapoorji Pallonji & Company and Hiranandani Group, which have their presence not only in India but abroad too. These companies are safe long term bets for investors with moderate risk appetite.