Highway projects' awards record six-fold growth

If the ground realties like higher number of projects awards and financial capacity of the construction companies have any indication, then roads construction segment has reached its peak level. Sources in roads and highways sector claimed that the order book-to-bill ratio of construction companies has gone up to close to 4 from nearly 2 in FY12, which gives revenue visibility of close to four years. The extent of projects awarded increased significantly over the past six years. The two major government bodies responsible for project allotment — National Highways Authority of India (NHAI) and Ministry of Roads and Transport & Highway (MoRTH) — together awarded 17,055 km of projects in FY18, a six-fold growth from FY13. Sector watchers believe that by the end of FY19, these agencies would allot 20,000 km of projects. Due to such a brisk pace of awarding projects, borrowings of NHAI have also grown five times to ₹1,20,000 crore in the past three years ending FY18. A large part of these borrowings including issuing bonds and selling already operational roads have gone into acquiring land and spending on road construction. In the prevailing scenario, major highway builders like Sadbhav Engineering, Dilip Buildcon, PNC Infratech, and KNR Constructions are well entrenched in the road sector largely due to higher proportion of HAM projects in their order book and at the same time they are relatively less indebted as compared to their previous financial positions.