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.
Expected Increase in M&A and Refinancing Activity for HAM Projects in India: ICRA
According to the ratings agency ICRA, there is expected to be an increase in mergers and acquisitions (M&A) and refinancing activity in highway asset management (HAM) projects in the upcoming quarters. Approximately 105 HAM projects, with a total bid project

Read more ...

Prestressed Precast Concrete Pavement (PPCP)TM
PPCP Technology can help build roads of good quality, which are highly durable, can be built quickly, and do not require extensive maintenance. The construction industry is primarily concerned with two issues: construction quality control and the speed

Read more ...

More Efficient Road with iROADS Asset Management
iROADS Asset Management System enables significant optimization of road maintenance costs while ensuring a well-maintained road network and road assets. India has the second largest road network in the world comprising national

Read more ...

Upgradation of PMGSY Road Using Full Depth Reclamation Process in the State of Nagaland
Rapid growth in industrial development and economy in last two decades has demanded upgradation of the existing road network in the country. Though there is a huge road network in the country, it is still inadequate to meet accessibility and mobility requirements

Read more ...

Erosion Control for Green Highway Construction
Namrata Bichewar, Regional Manager - Maharashtra, Gabion Technologies India Pvt Ltd, discusses the company’s contribution in constructing green highways using Bio-Engineering Erosion Control methods and solutions. The government plans to construct 26 green expressways

Read more ...

Stone Matrix Asphalt is enabling durable and maintenance-free roads in India
A Stone Matrix Asphalt (SMA) pavement laid at Parimal Underpass in Ahmedabad Municipal Corporation has completed 7 years. The underpass, which used to get submerged under almost 2m depth of water due to waterlogging in the monsoons every year

Read more ...

Effect of Climate Change on Flexible Pavements
Dr. Abhishek Mittal, Principal Scientist, CSIR-CRRI New Delhi, discusses the effects of changes in temperature due to climate change on pavements with respect to their material, design, construction, and maintenance. A long-term shift in temperature and weather

Read more ...

Latest Technologies and Mechanization for Sustainable Road Construction & Maintenance of Pavements
Massive road development work for huge road network of the country’s national assets is essential for overall development of the country. However, major road development projects consume a huge quantity of soil and crushed aggregates. The consumption of these materials

Read more ...

AEW’s Dr. Road: Doing Away with Potholes Instantly
Following the launch of AEW’s road repair machine ‘Dr. Road’ by Shri Nitin Gadkari, Minister for Road Transport & Highways, Shatish Panchal, Director, AEW Group, informs that the company is geared up to promote the machine to State PWDs and CPWDs

Read more ...

Paving-Grade Asphalt Binders
Evaluating the Quality of Asphalt Binders and Plant Produced Asphalt Mixes through Recovered Asphalt Testing and other Mix Properties, Amma Wakefield, MASc, PEng Canadian Regional Engineer Asphalt Institute, Paving-grade asphalt binders are specified based

Read more ...

India’s Road Construction Sector Needs an Ecosystem of Safety
The Global Road Construction & Safety Conference 2022 will be held on 30th November 2022, at Hotel Taj Palace, New Delhi, in collaboration with CSIR- CRRI, Bitumen India Forum (BIF), National Highways Builders Federation (NHBF)

Read more ...

Colored Asphalt: The Changing Face of Road Construction in India
The road construction industry in India is undergoing a paradigm shift: strong demand, higher investments, and the emergence of newer and more innovative technologies is giving a renewed focus on sustainable developments. These technologies include

Read more ...

Economization of Road Subgrade Material by Mechanical Stabilization
Subgrade makes the formation level of the road crust. The material specifications of subgrade material are therefore more demanding than the soil used in general fill or embankment. In some construction projects, it becomes difficult to get the required subgrade

Read more ...

Perpetual Pavement: Way Forward from Design to Quality Construction
Atasi Das, Assistant Vice President, G R Infraprojects, explains the concept of the Perpetual Pavement in India’s expressway constructions and its practical implementation with due consideration of layers, materials, and thicknesses

Read more ...

Performance of Curing Compounds in Development of Strengths in Concrete Mix to be Used in the Construction of Rigid Pavements
Dr. Rakesh Kumar, Senior Principal Scientist & Pankaj Goel, Senior Technical Officer, Rigid Pavements Division,CSIR-Central Road Research Institute (CRRI), New Delhi, give information on the Performance of Curing Compounds in Strengthening

Read more ...

ROADMAKING IN EXCESSIVE COLD CONDITIONS
The construction and maintenance of roads with flexible pavements in very cold regions where annual temperatures range between +30oC to -35oC has got its own challenges. The bitumen in the asphalt layer becomes hard at such low temperatures

Read more ...

Ashoka Buildcon Sets Another Milestone at Bundelkhand Expressway
The Bundelkhand site team achieved yet another feat on 15 Jan 2022 by completing 13 deck slabs of varying types in just 46 days. Therefore, it is a demonstration of exemplary display of overall project executing capabilities

Read more ...

Constructing Bowstring Girder ROBs on Purvanchal Expressway
Er. Devjyoti Paul, Project Manager & Er. Harpreet Singh, Chief Project Manager, B&SEC, share the technical and construction features of three bowstring girder ROBs, recently constructed under Package I & III of Purvanchal Expressway in the state of Uttar Pradesh

Read more ...

Extruded Polystyrene Sheets for Road Construction
Use of Extruded Polystyrene Sheets (XPS) in the construction of the Zojila Approach Road has been especially effective as XPS is the most suitable, convenient, and cheaper solution for mitigating frost action on pavements, increasing the life of pavements

Read more ...

Roads & Highways - Pandemic shocks notwithstanding, government’s thrust on infrastructure to ensure execution momentum continues in FY22
The Indian road network is the second largest globally, with a length of around 63.86 lakh km. The outbreak of the virus towards end-FY20 had created panic globally, leading to the temporary suspension of economic activity

Read more ...

×
Sign-up for Free Subscription
'India Construction Week'
Weekly e-Newsletter on Construction Industry
Get the latest news, product launches, projects announced / awarded, government policies, investments, and expert views.
Click here to subscribe.
×