Govt to keep impetus on infra sector for tendering in near term: Ind-Ra
May 21, 2021
Mumbai (Maharashtra) [India], May 21 : Incremental order inflows in roads, railways, irrigation, housing development projects and distribution segments will drive the demand forecast for the infrastructure sector in FY22, according to India Ratings and Research (Ind-Ra).
Schemes like such as Bharatmala, commissioning of dedicated freight corridors, Swachh Bharat Mission and Jal Jeevan Mission along with affordable housing schemes and National Infrastructure Pipeline will drive order inflows in the medium term.
However, continued competitiveness in these segments is likely to result in a moderation of operating margins of engineering, procurement and construction (EPC) companies.
Ind-Ra has revised the sector outlook to improving from negative, based on rich budgetary allocations which will result in huge order inflows coupled with better execution rates.
The amount of tenders floated (above Rs 250 crore) across all divisions in construction space rose 38 per cent year-on-year to Rs 7.98 lakh crore in FY21, signifying the impetus shown by Central and state governments.
Roads, irrigation and other real estate segments (including hospitals and hotels) on a combined basis contributed around 81 per cent to overall tenders floated.
In FY21, the tenders floated saw incremental growth, majorly contributed by Uttar Pradesh at Rs 1.22 lakh crore. The tenders announced from UP contributed 15 per cent to overall tenders floated across the country in FY21.
The orders floated are majorly from Bharatmala Expressway projects and Swachh Bharat Mission schemes. UP was followed by Telangana and Andhra Pradesh which together contributed around 16 per cent to overall tenders floated in FY21.
Ind-Ra said the orders awarded grew 72 per cent in FY21 to Rs 38,300 crore with road segment contributing major chunk at 27 per cent. This was followed by mining at 23 per cent and railways (including metros) at 21 per cent.
Of the overall order awards in FY21, 70 per cent were contributed by roadways (27 per cent), mining (23 per cent) and railways (21 per cent).
