In general, I tend to stay away from infrastructure stocks, mainly because of some hard lessons learned from my past investments in companies like Dilip Buildcon and PSP Projects.
My experience with these companies showed me just how unpredictable the infrastructure sector can be. It’s heavily influenced by factors outside the company’s control, like government policies, regulatory hurdles, and economic ups and downs. Issues like project delays, stretched working capital cycle, cost overruns, and funding challenges can hit hard, making it tough to get consistent returns.
With Dilip Buildcon, I realized how quickly cash flow problems and high debt levels can spiral, especially when a company relies heavily on government contracts and timely payments. PSP Projects taught me that even a strong order book doesn’t always mean smooth sailing, there can still be challenges like thin profit margins and long working capital cycles.
These experiences have made me cautious about investing in sectors where the growth depends too much on external factors. I now prefer to focus on areas where companies have more control over their growth, better pricing power, and fewer surprises.
While I know there are exceptions in the infrastructure space, the risks don’t align with my investment approach anymore. I’d rather stick to sectors where I feel more confident in understanding and predicting the growth potential.
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