Roads and Railways boost awards

Roads and Railways boost awards; tenders up marginally Overall tendering grew 5% YoY during H1FY22 Awarding activity grew at a 2-year CAGR of 22% in H1FY22 Infrastructure credit near all-time highs

Roads and Railways boost awards

As per a research report released by Emkay Global Financial Services, the Infra project’s award tendering activity picked up in Q2FY22 with 22% YoY growth. Road tenders continued to drive the bulk of the activity in this space (31% of H1FY22). H1FY22 awarding activity has gradually surpassed activity reported in H1FY20/21, delivering a 2-year CAGR of 22% the Central government achieved 31% of its annual budget target with an outflow of ~₹1.71 lk cr (up 28% YoY).

Traction in Central government spending remained robust, with a 12% CAGR in outflows in the last four years. The state government spending (top 15 states) touched ~₹1 lk cr (up 70% YoY) during the Apr-Aug’21 period. The Industrial Credit growth stood at 1.5% YoY as of Aug’21, while infrastructure credit grew 6%.

Tendering Activity
After a muted Q1FY22 (down 13% YoY), tendering picked up in Q2FY22 with 22% YoY growth. Overall tendering grew 5% YoY during H1FY22. Roads, Power Distribution and Power Equipment sectors saw strong growth during the quarter, while Real Estate and Water saw a decline in tendering.

Road tenders continued to drive the bulk of the activity in this space (31% of H1FY22), followed by Water Supply and Railways, which contributed 8-11%. During the quarter, a good number of orders were tendered by Bharat Broadband Network Ltd.

On a TTM basis, tendering stood at ~₹8 lk cr, with Road accounting for ~40% and Water & Irrigation accounting for ~20% of tenders.

Awarding Activity
H1FY22 awarding activity has gradually surpassed activity reported in H1FY20/21, delivering a 2-year CAGR of 22%. The Road sector remained the strongest driver, followed by Railways and Water Supply. Real Estate and Irrigation, on the other hand, were down.

Excluding Roads, the 2-year CAGR stood at 7%, clearly highlighting the significance of the sector in the overall scheme of things. Awarding activity grew 27% YoY and 68% QoQ in Q2FY22, led by Roads, Railways, Water Supply and Power Equipment.

Roads and Railways boost awards

Central & State Capex, Industrial Credit
For the Apr-Aug’21 period, the Central government achieved 31% of its annual budget target with an outflow of ~₹1.71 lk cr (up 28% YoY). Roads, Railways, Defence and Housing sectors, which generally account for ~70% of overall capex, saw 44% YoY growth.

Traction in Central government spending remains robust, with a 12% CAGR in outflows in the last four years. The Ministry of Roads has outpaced last year’s spending, up 123% YoY.

Additionally, state government spending (top 15 states) touched ~₹1lk cr (up 70% YoY) during the Apr-Aug’21 period and was ahead of last year’s spending (23% of BE has been achieved vs. 18% YoY). State capex recorded a 2-year CAGR of ~3%. During the first two months of Q2FY22, state capex grew 26% YoY. On a combined basis (Central + States), capex growth stood at ~42% YoY with a 2-year CAGR of 8%.

Roads and Railways boost awards

Infrastructure credit near all-time highs
Industrial credit was up 1.5% as of Aug’21 at ₹28.19 lk cr. Although the absolute value has largely grown over the last few years, industrial credit as % of total non-food credit has declined from a high of 46% in FY13 to 26.04% as of Aug’21, and stands at a 10-year low currently.

Infrastructure, a key sub segment, currently has an outstanding credit of ₹10.85 lk cr and registered 6% growth as of Aug’21. It is important to note that at ~₹10.8 lk cr as of Aug’21, outstanding infrastructure credit has gradually risen and stands near an all-time high, mainly led by a healthy pace of lending to the road sector, and has been trending in such narrow range for the last 12-15 months.

Emkay Global’s top picks in the sector are L&T (TP ₹2,000), Kalpataru Transmission (TP ₹565), HG Infra (TP ₹800) and KEC International (TP ₹490), considering their superior execution capabilities, existing order backlog, and relative valuations.

Some companies, like Siemens (Under Review) and JMC Projects (Not Rated), saw strong order inflows. Siemens had an inflow of ₹4,300 cr vs a ₹3,000 cr run rate, increasing the order book to an all-time high of ~₹14,300 cr at the end of Jun’21. JMC received ~₹8000 cr in inflows during H1FY22, up 43% YoY.

About Emkay Global Financial Services Limited
Emkay Global Financial Services Ltd., headquartered in Mumbai, India, is an integrated securities firm offering a wide range of investment avenues including investment banking, institutional broking, private wealth management, and financial products distribution. Its institutional broking division services clients across all-important global geographies and its research have received recognition from important bodies including Thomson Reuters, Asiamoney, The Wall Street Journal amongst others, over the years.
NBM&CW November 2021
Performance of Thin White Topping (TWT) Overlay for NH-848

Performance of Thin White Topping (TWT) Overlay for NH-848

Vikas V. Thakar, MD, Pavetech Consultants India, presents the uses and advantages of TWT as a cost-effective treatment and a sustainable solution for rehabilitating and strengthening of flexible pavements, as seen in the NH-848 Nashik

Read more ...

REJUPAVE Technology for High RAP Recycling of Bituminous Pavement

REJUPAVE Technology for High RAP Recycling of Bituminous Pavement

Satish Pandey, Principal Scientist at CSIR-CRRI, New-Delhi, and Associate Professor, Academy of Scientific and Innovative Research, gives a brief overview of Hot Mix recycling process using bio-oil based rejuvenator REJUPAVE to facilitate

Read more ...

Safety Challenges On Indian Roads

Safety Challenges On Indian Roads

S.K. Nirmal, Secretary General, Indian Roads Congress, Director General (Road Development) & Special Secretary (Retd), MoRTH, gives an overview of India’s road network, causes of road accidents, and the safety measures and policies required

Read more ...

Dynapac Machines Deployed on Prestigious Palkhi Marg Project in Maharashtra

Dynapac Machines Deployed on Prestigious Palkhi Marg Project in Maharashtra

The Palkhi Marg holds deep significance as a pathway of faith for devotees of Lord Vitthal. Every year, thousands of ‘warkaris’ embark on a spiritual journey to the temple town of Pandharpur in Maharashtra. With the vision to create a Bhakti Marg and ensure

Read more ...

Delhi Vadodara Expressway Package-1 An overview

Delhi Vadodara Expressway Package-1 An overview

The Delhi-Vadodara Expressway is a part of the most anxiously awaited Delhi-Mumbai Expressway - the foundation stone for which was laid on March 8th 2019. Also referred to as the Delhi-Mumbai Industrial Corridor, it is planned as part of the Bharatmala

Read more ...

Bonded Rigid Pavement - A New Edge Concrete Pavement

Bonded Rigid Pavement - A New Edge Concrete Pavement

The exponential growth of the highway infrastructure in the past two decades has increased demand for long-lasting, durable pavements. Rigid pavements are suitable for heavily trafficked areas and are found to be performing satisfactorily with minimum

Read more ...

BRO Builds ‘Zero Fatality Corridors’ in Arunachal Pradesh

BRO Builds ‘Zero Fatality Corridors’ in Arunachal Pradesh

Through its unwavering commitment to road safety, eco-conscious practices, and visionary solutions, the Border Roads Organisation is elevating the standard of road infrastructure development in India. In Arunachal Pradesh, its contributions

Read more ...

Engineering Measures for Pothole Prevention

Engineering Measures for Pothole Prevention

Roads, pavements, and other paved surfaces have depressions in them called potholes which are caused by a variety of conditions. They not only present a serious risk to traffic and pedestrians, but also necessitate expensive repairs by local governments and

Read more ...

Pavement Marking Essential For Road Safety

Pavement Marking Essential For Road Safety

Vivek Singh, Founder, BuildStreet delves into the significance of pavement marking, its objective, and importance, with a focus on Hot Applied Thermoplastic paint - the predominant choice for road markings in India, its technical aspects, application methodology

Read more ...

GAEPL Achieves Record Paving of 100 lane-km in 100 hours

GAEPL Achieves Record Paving of 100 lane-km in 100 hours

Ghaziabad Aligarh Expressway Private Limited (GAEPL), under the guidance of Cube Highways, has set an example of speedy, safe, and sustainable road construction through research, integration of advanced technology, following best international practices

Read more ...

Indian Companies Delivering Projects Overseas

Indian Companies Delivering Projects Overseas

External affairs minister S. Jaishankar during his visit interacted with the workers and the senior staff, and lauded the role of Indian infra companies, saying that he was “impressed by their enthusiasm”. “Strong economics will complement shared values in taking

Read more ...

NHAI awards 6,003 km of highway projects in FY23

NHAI awards 6,003 km of highway projects in FY23

According to Motilal Oswal Financial Services, the infra project awarding activity picked up and gathered pace in Q4 of FY23, with NHAI awarding total projects of 6,003 km in FY23, much below its FY23 target of 6,500 km. The total value of projects awarded

Read more ...

Is the Indian Road Sector Navigating a Smooth Journey?

Is the Indian Road Sector Navigating a Smooth Journey?

This report covers the current state of the Indian Road Sector, performance of road projects under Hybrid Annuity Model, financial performance of major road developers, and the outlook for FY24. CareEdge Ratings analysed 235 HAM projects awarded between

Read more ...

Balanced Mix Design for Bituminous Mixes

Balanced Mix Design for Bituminous Mixes

As more than 90% of the roads in India have bituminous surfacing, a proper bituminous mix design also assumes significance for better performance of the bituminous roads. India is currently witnessing huge investments by the Indian Government towards

Read more ...

Sustainable Road Construction in Hilly Region

Sustainable Road Construction in Hilly Region

Siksha Swaroopa Kar, Principal Scientist, Amit Kumar, Technical Officer, Krishan, Technician, Flexible Pavement Division, CSIR-CRRI, New Delhi, discuss mechanized laying of cold bituminous layer, the mixer and paver that have been fabricated, and the effectiveness

Read more ...

Implementation of Road Maintenance Management System - Benefits & Technologies

Implementation of Road Maintenance Management System - Benefits & Technologies

The maintenance of road pavements is essential to ensure the safety, reliability, and sustainability of road networks. A road maintenance management system (RMMS) involves effective management of resources to optimize the life cycle of roads, reduce maintenance

Read more ...

Replacement of Steel Reinforcement with  Synthetic Fibre for Concrete Pavement & Floor

Replacement of Steel Reinforcement with Synthetic Fibre for Concrete Pavement & Floor

Manoj Didwania, Adani Total Gas Ltd, Dharamsinh Desai University (DDU-Nadiad), Cept University, presents a paper on the use of Macro Synthetic Reinforcement Fibre (MSRF) as full or partial replacement of Steel Reinforcement for Concrete Pavement

Read more ...

GTI® Reinforced Soil Slope System

GTI® Reinforced Soil Slope System

GTI® is involved in developing environmentally friendly construction products and systems, which are critical for achieving infrastructure growth in a sustainable manner. The company’s GTI® Sloping Fascia Unit and the new system GTI® Reinforced Soil Slopes

Read more ...

CRISIL: Debt to rise for road developers amid strong revenue growth

CRISIL: Debt to rise for road developers amid strong revenue growth

Sizeable equity commitments in under-construction projects and rising working capital requirement will increase the debt burden of road developers, though revenue growth will also be high in the next two fiscals driven by strong awarding and execution

Read more ...

Indian Toll Roads to witness moderation in growth to high single digits in FY2024 after a stellar 17-20% growth in FY2023: ICRA

Indian Toll Roads to witness moderation in growth to high single digits in FY2024 after a stellar 17-20% growth in FY2023: ICRA

WPI for December 2022 is significantly lower at 5.0% against WPI of 14.27% in December 2021. ICRA Ratings expects the toll road projects growth to moderate to high single digit in FY2024 after a 17-20% growth witnessed in FY2023 with moderation in the

Read more ...

To get latest updates on whatsapp, Save +91 93545 87773 and send us a 'Saved' message
Click Here to Subscribe to Our eNewsletter.