Construction companies are expected to see robust execution on the back of healthy order books in the near to medium.
In order to achieve a $5 trillion economy by fiscal year 2025, India will require investments in infrastructure to the tune of $1.4 trillion. Therefore, the growth in the medium term will be driven by Govt's thrust on infrastructure as visible in rising central and state budget allocations to meet the infra build out outlined in the National Infrastructure Pipeline which was launched to meet projected infrastructure investment. This is already manifesting in strong order inflows in various sectors, with roads sector leading the pack with highest ever budgeted allocation followed by railways, power and irrigation sector, thus, providing healthy revenue visibility over the next few years.
Having said that, overall construction segment has been facing headwinds in terms of surge in prices of key inputs, particularly steel and crude oil. Road players have also seen increased competitive intensity with relaxation in bidding norms. That had impacted operating margins of construction companies in last fiscal and first half of current fiscal.
For road players, while revenue growth and order books are expected to remain healthy, competitively bid orders of the past will continue to weigh down the profitability. The recent softening in input prices may provide some cushion, but the margins will remain below pre-pandemic levels next fiscal.
In the milieu, CRISIL Ratings is organising a webinar on diversified EPC and roads' construction sector: Prepped for the next ride' on December 13, 2022, between 3:00 pm and 4:30 pm, where our experts will delve into:
Capital expenditure plans of the government (central, state and public sector enterprises) and private sector
Outlook on construction opportunities and execution pace in roads sector
Opportunities for EPC players across other infrastructure sectors such as railways, irrigation and power
Revenue and operating margin outlook for diversified EPC and road EPC companies, with an eye on the order book trend for large, diversified players
Trend in debt metrics, and credit outlook
The presentation will be followed by a panel discussion with industry leaders and a Q&A session.
Disclaimer: This event and its content are intellectual property and confidential information of CRISIL. Any use of the same without written permission of CRISIL is illegal and hence punishable. Recording the webinar in any form in full or part or copying, altering, distributing or streaming the webinar is strictly prohibited and violation will attract legal action.
