Construction sector awaits biz bonanza: ICRA

The new order inflows for construction companies will go up drastically in 2020 with a huge pipeline of projects in the infrastructure sector, said rating agency ICRA while stressing on a stable outlook for the construction sector though delays in land acquisition, funding issues, and state government priorities were a threat to new order inflows. As the government plans to more than double the investment in infrastructure sector to about ₹100 lakh crore over the next five years, construction companies are likely to witness significant opportunities with key segments being highways, railways, ports, urban infrastructure and airports. These include, (besides the core railway capex for doubling, new lines, signaling, electrification, etc), station redevelopments, development and upgradation of national and state highways, the Bharatmala Pariyojana which is the largest road development plan in India. The industrial and real estate (excluding affordable housing segment) sectors are expected to remain muted, with weak private sector capex growth. The order inflow for construction sector has been robust over the last few years, supported largely by increased government spending towards infrastructure. However, H1-FY2020 has witnessed lower new order inflows and cancellations of some orders in Andhra Pradesh, which has resulted in a decline in the order book for some players. Nevertheless, the order-book position of most of the construction players is currently adequate to provide medium term revenue visibility, the agency said.