Mid-sized EPC segment revenue to grow 15 pc in FY21: Crisil
May 12, 2021
Mumbai (Maharashtra) [India], May 12 : Strong order books and better operational preparedness in the second year of Covid-19 pandemic will swell the top-lines of mid-sized engineering, procurement and construction (EPC) companies by 15 per cent this fiscal compared with a 10 per cent fall last fiscal, according to Crisil Ratings.
Mid-sized companies are those with annual revenue of less than Rs 1,000 crore.
A study of over 600 Crisil-rated mid-sized EPC companies into construction of roads, commercial and industrial buildings, irrigation and allied activities indicates as much. The aggregate top-line of these players is estimated at Rs 70,000 crore for last fiscal.
The second wave of pandemic, slowdown in project execution and labour migration are expected to curb the performance of these companies in the first quarter of this fiscal sequentially.
The slowdown, however, will be less severe on-year because activities had ground to a halt amid a nation-wide lockdown in the first quarter of last fiscal.
The good part is, said Crisil, that construction sector has been exempted from lockdowns so far this fiscal. On-site stay arrangements for labourers and pandemic-related precautions have reduced migration to 20 per cent this year so far.
Also, most project sites are in non-urban locations, which have been less impacted by the pandemic compared with the urban areas.
Mobility curbs in high-infection states and vaccination for all adults could help contain the pandemic's spread over the next two to three months. Consequently, economic activities should rebound to near-normal from the second quarter.
Over the past few years, the EPC segment has received a big boost from the government. Projects awarded by the National Highways Authority of India and the Ministry of Road Transport and Highways increased to about 10,500 km last fiscal from 8,500 km in fiscal 2020.
Further, projects worth Rs 111 lakh crore were announced under the National Infrastructure Pipeline which is to be implemented over five fiscals through 2025. Roads, urban and rural infrastructure, and irrigation account for about half of these investments.
Last fiscal, industrial capital expenditure was deferred and real estate projects slowed. But commercial construction activity is expected to revive this fiscal.
