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, together with significant budgetary allocation to the sector. All the same, with the leverage level low at present, developers have headroom to borrow, which would keep their credit risk profiles stable. Asset monetisation will be crucial to rein in debt at comfortable levels. A CRISIL Ratings analysis of 18 engineering, procurement and construction (EPC) players, constituting 70% of the sector revenue, indicates as much.

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