Mid-cap construction companies perform better than large cap

MUMBAI: Out of 35 construction companies, those with a market capitalization of less than Rs 1,000 crore outperformed their larger counterparts in
the fortnight to March The total market capitalization of the seven large cap companies—Rs 57,275.52 crore as on March 26—has risen by 17% since March 9. On the other hand, the market cap of mid cap companies—the remaining 28 companies—has grown 21% in the same period to Rs 6391.81 crore. The Sensex rose by 20% in the same period.

Large cap companies include Larsen and Toubro, Punj Lloyd, Jaiprakash Associates, IRB Infrastructure , IVRCL Infrastructure, Nagarjuna Construction and Era Infra Engineering while the
 
rest lie in the mid and small cap categories.

One of the reasons for the outperformance of the mid cap companies, is that most in the list of remaining 28—namely, Hindustan Construction, Patel Engineering, Simplex Infrastructures, Gammon India, Consolidated Construction, Sadbhav Engineering, BL Kashyap & Sons, Ahluwalia Contracts, Madhucon Projects and Subhash Projects—have seen huge bargain buying in the last few trading sessions. These are the companies, which were earlier in the large cap space in the same period last year but were pounded heavily as they were in the lower end among their larger players.

For example, HCC, Patel and Gammon had a market capitalization in excess of Rs 3000 crore on March 23, 2008 but now they quote below Rs 1000 crore. This has led to some value buying as they are up by around 20% since March 9.
Construction companies' performance on bourses
 
Company name
Current price
% change since March 9
Large caps (Top 5)
 
 
Larsen & Toubro
651
15.9
Jaiprakash Associates
85
29.8
IRB Infra
82
-5.5
Punj Lloyd
83
19.9
IVRCL Infrastructures & Projects
128
16.5
Total
57275.5
17
Others (Top 5)


Hindustan Construction Co
38
29.3
Patel Engineering
128
20.8
Simplex Infrastructures
142
35.8
Gammon India
63
24.9
Noida Toll Bridge Co.
24
18.2
Total
6391.8
21
Source: BSE prices