Crisil’s advisory business reported a 60 per cent decline in revenues in January 2009 quarter led by the slowdown in the capex cycle. The growth rates in this business are expected to improve given the government's increased focus on infrastructure spending as well as the gradual revival in the domestic economy. The research business also holds potential. However, stability in the financial markets is seen among requisites for an improvement in the prospects, which may take some more time to materialise. Meanwhile, at current price of Rs 3,521, the stock trades at a price-to-earnings multiple of about 16 times based on its estimated earnings for year ending December 2009.

Gateway Distriparks

A significant contraction in India's foreign trade has dimmed the prospects of one of India’s largest container freight station (CFS) operators. This is also a reason why the company reported a 20 per cent year-on-year decline in CFS volumes for the March 2009 quarter. However, considering its strong business model – it operates in some of the largest ports in the country such as JNPT, Chennai, Vizag and Kochi – the company could be a good long-term play on India's growing trade and economy.

In addition to the CFS business, the company's strategy to leverage its existing logistic business by way of backward integration into the rail freight and the cold chain businesses would drive growth in future.

The railway freight business contributes about 35 per cent of its total revenue. However, due to the lower utilisations and higher fixed costs, this business is incurring losses. The company currently own 15 rakes and runs 2 rakes on lease basis, which has helped notch up volume growth of about 70 per cent during the March 2009 quarter. Although it has been able to increase its volumes, profitability will remain an issue as the business is expected to be break-even only in 2010-11. Analysts are expecting the volumes and margins to improve going forward, on the back of an increase in the utilisation levels. Higher volumes will also lessen the impact of fixed cost.

The company is present in the entire logistics chain with presence in key trading and industrial regions. However, for the full benefits to accrue, it is crucial that the economy revive. At Rs 96.35, the stock is trading at 11.3 times its estimated 2009-10 earnings, and is suitable for investors with patience and some appetite for risk.

Patel Engineering

Patel Engineering, which is an established player in the infrastructure space, derives a large chunk of its revenue from government-backed projects, where growth visibility is still strong. Besides, it is also a leading player in hydro-power construction space as well as projects related to irrigation, which are good attributes given the vast opportunities in these segments.

That apart, the company has a presence in the construction of road and urban infrastructure. Post the elections, analysts are more convinced about the increased capex in these segments.

Apart from the long-term growth drivers, Patel Engineering currently has a strong order book of Rs 7,200 crore, which is 3.3 times its 2008-09 revenues and provides good visibility. Additionally, the relatively lower commodity prices as well as interest rates, and increased systemic liquidity should augur well for the sector and the company. To give an indication, for December 2008 quarter, the company reported an interest outgo of Rs 19.5 crore (Rs 2.9 crore in December 2007 quarter), which could trend down going ahead.

The company also owns real estate assets and plans to start power generation, as part of its long-term growth strategy. It has plans to set up 1,200 mw of power generation capacity in 3-4 phases, for which the company has acquired the land and is awaiting environment clearance. In the real estate space, the company has a land bank of 1,127 acres spread over cities including Hyderabad, Chennai, Bangalore and Mumbai. However, the benefits of this will only accrue over the next 4-5 years, as the company plans to develop this land ba