Ashoka Buildcon is a Construction Company primarily focused on the Road Segments.Given India’s huge demand for infrastructure and roads,the company is growing at 50%+ growth rates.However the quality of management is suspect given tax seizures,criminal cases and related transactions.The valuation of the company is also not cheap at around 22-23x P/E and around 3x P/B.The Company has grown at an excellent rate while maintaining a Net Margin of 8-10%.


While I like the Road Sector in India and the Company is a well positioned company in this sector,I hate to invest in a company where Management seems untrustworthy.The valuation of the company is not exactly cheap either without being very expensive at around 20x.However if something bad happens Macro wise then expect the stock price to plummet .There are other companies in the Road Sector like IL&FS which operates in the same segment but has a better management trust quotient.

VA Tech Wabag is one of the best quality companies to come out with an IPO in the Indian Market in 2010.The Company boasts of a quality management,good technology and fast growth.Despite a hiccup in 2009,the company has picked up its growth in 2010 and operating in a fast growing Water Industry with good execution,it looks to have little downsides.While Low Net Margins and High Working Capital is a characteristic of the EPC sector it operates in,the company has constantly been able to improve on those parameters.


There is almost nothing to dislike about the company except the valuation which is a tad expensive at around around 28-30x,however the sector P/E is also around 30-35x and VA Tech Wabag deserves a premium.Given the high quality of the company and the Water Sector it operates in,I would invest in the company as the future growth is tremendous.Also the international diversification and the Recession Proof Water Industry makes this investment safer than your normal Indian EPC company which are asking for the same valuations.

TSMC Cost Targets Would be Incredulous coming from any other Company

TSMC has said that it would look to become amongst the top 5 suppliers in the world in the next 5 years and looks at a Cost per Watt of only 19c/watt in the next 3 years which would be further reduced to 14c/watt.This is much lower than the current costs for the Solar Leader First Solar which is at around 75c/watt.This target if achieved would make solar energy the cheapest form of energy and would definitely make TSMC No.1.Note First Solar is planning a cost target of 52c/watt in the next few years.TSMC is planning to start production in Q211 with 200 MW of production planned for 2012.


1) Valuation – The Valuation of the company is not cheap at around 3x P/B and around 28-30x P/E .But with companies of the same quality going in for around the same if not higher valuations,why would the company sell the shares at a discount.This however does not make it better for investors who get very little for investing in a newly listed company.This stock is an unlikely candidate to be multibagger

2) Negative Cash Flows – The High WC Requirements of the Sector and Fast Growth has meant that the Operating Cash flows of the company have been negative in the last 3 years.


The Company and the Sector in which it operates is a good one,however the Valuation has discounted most of the good things about the company.The company has very little to be negative about except the high working capital ,negative cash flows and the like.But that is a feature of the Construction Sector rather than anything negative about the company.The high valuation given to the issue makes it avoidable given better opportunities in the Indian market.

Electrosteel Integrated is coming out with an IPO to raise around $50mm to fund its 2.2 million ton plant in Jharkand,India.The company is promoted by its listed parent Electrosteel Castings which has been running for the past 30 years and is leader in the Ductile Pipe Category.This company will have ECL holding of 34% post IPO with the other major shareholders being a bunch of PE firms and Stemcor.The plant construction will require around $1.5 billion capex out of which around 40% has been already been spent.Debt will be around $1.1 billion mostly at 12.25% interest rate.

The company has pluses as well as risks,however the plant should start operating in Oct 2010.While the investment is risky,the valuation being offered is cheap with good promoters.For people looking at lesser risk,ECL the parent company also makes a lot of sense.It is trading at 8x trailing P/E and around 1 P/Bx which is again cheap.It has a 34% share in the new company so will gain from any upside as well.Its investment in the company is Rs 700 crore with a total market cap of around Rs 1600 crore.Not expensive and a safer way to invest in

Nuclear Energy Insider spoke to Kenneth Hughey, Vice President, Nuclear Business Development at Entergy Nuclear who spoke about the financing problems that lie ahead for the US nuclear industry.“With nuclear construction being a high priority for many US utilities, it is important to stop and consider financing and the costs associated with new build projects. Permitting and licensing are aspects of the construction process where utilities could easily spend $60-100million without having guaranteed financial backing to proceed with the full construction project. Consequently it is extremely important to understand the costs associated with these processes and to learn how to keep your costs down while at the same time reducing future project risk.”There are many aspects of financing that need to be understood in order to proceed with new nuclear projects.