“The large expectation is that over the next few months, the next few quarters, orders will keep on coming through because there is a budgeted expenditure in plan, specifically in terms of high-intensity capex projects,” Joshi explained. He added that while order momentum may seem sluggish at present, the coming quarters could see a strong rebound across segments such as urban and rural affordable housing, ports, roads, railways, and metro projects.
According to Joshi, a bit of patience could go a long way for investors. He believes that both central and state government tendering will soon gather pace.
When asked about investment opportunities, Joshi highlighted Larsen & Toubro (L&T) as the most comprehensive play in the infrastructure universe. “The best play here is going to be L&T because it is a complete play when it probably comes through infrastructure, hydrocarbons, new energy, defence and therefore that probably becomes a no-brainer. Any decline on this one obviously becomes a good buying opportunity,” he said.
He further added that L&T’s execution strength, both in domestic and international operations, continues to support its working capital efficiency. This, in turn, should drive return on equity (ROE) expansion over the next few quarters.
Power sector prospects also look strong, Joshi noted, with NTPC and Tata Power well-positioned to benefit from the ongoing renewable energy transition. “Both in terms of generators, transmitters, as well as EPC players, there are a clutch of players that can probably do well,” he said. In the EPC and energy space, Joshi mentioned Power Mech Projects as an example of a company benefiting from the government’s continued focus on new energy, hydrocarbons, and renewables. Turning to the railways, Joshi pointed out the steady pace of order inflows for Texmaco Rail and Titagarh Wagons, both of which are expected to gain from ongoing tender activity. “It is going to be a multiplication of effort that probably comes through once the wagons are made,” he remarked.
On the housing side, Joshi expects select housing finance companies catering to rural and semi-urban India to do well, aided by affordable housing initiatives. He also cited NCC and Pennar Industries as examples of well-run infra firms with robust business models. “If they execute well, numbers will keep on showing up in the balance sheet. The only caveat is that you need to have a long-term view as far as infrastructure is concerned,” he advised, adding that investors with a two- to three-year horizon could see decent returns.
Chemical Sector Recovery Still a Few Quarters Away
When asked about the prolonged weakness in the chemical sector, Joshi cautioned that the turnaround may still be a quarter or two away. “China still remains weak and that is the major driver in terms of global demand and supply as far as chemicals are concerned,” he said, adding that China’s role as a dominant supplier continues to influence pricing and margins globally.
Using SRF as a reference point, he noted that the company’s fluorochemicals business and the ramp-up of R467A, which is set to replace R22, would be key growth areas to watch. However, challenges remain in packaging films due to intense Chinese competition, particularly impacting SRF’s Thailand business.
Joshi also mentioned that while technical textiles might see healthy demand in the polyester tyre cord fibre segment, the nylon tyre cord side could offset gains. Hence, investor caution is warranted.
“We have just got a couple of chemical names in our model portfolios both locally and globally as well. One is an agrochemical name and one is a pure play chemical name, but they have all run up quite significantly. So again, we will have to wait for declines and be very-very stock specific in this space,” he concluded.