Why Distress Signals Are Coming from Indian Infrastructure Stocks



Negative returns for the benchmark index

In the previous articles, we analyzed sales, EBITDA, credit growth, and some important financial ratios. In this article, we will look at how stocks of some major Indian infrastructure companies have performed in the last year as of December 22, 2015. The chart below shows the annual returns for the benchmark sector index the S&P BSE India Infrastructure Index. The index measures the performance of the top 30 Indian companies in the infrastructure sector or companies with a related business. Within the last year, the benchmark index has given a negative return of 11.5%.

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Performance of some major stocks

  • Reliance Infra: Reliance Infra is a major private firm in India operating in the energy utilities segment. Reliance Infra has returned a negative 12.8% in the last year.
  • Tata Power: Tata Power is a major private player in the power generation segment. Tata Power has returned a negative 23.3% in the last year.
  • GMR Infra: GMR Infrastructure is a conglomerate involved in infrastructure activities like airport construction and management, power generation, and coal. GMR Infra has given a negative return of 9.7% in the last year.
  • Adani Ports SEZ: Adani Ports is a private sector firm involved in development and operation of ports. Adani Ports has given a negative return of 13.2% in the last year.
  • NTPC: National Thermal Power is a government-owned firm in the power generation business. While private sector companies in the infrastructure sector have given negative returns this year, NTPC has managed to give a positive return of 0.85% in the last year.

India-focused mutual funds

India-focused mutual funds like the Wasatch Emerging India Fund (WAINX) and the Eaton Vance Greater India Fund – Class A (ETGIX) have some exposure to the Indian infrastructure sector. The top ten holdings of the ETGIX constitute large-cap banking companies like the ICICI Bank (IBN). The funds also invest heavily in the technology sectors (INFY) (WIT).


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