ICRA Revises FY2025 Road Execution Target to 10,000-10,500 km from 12,500-13,000 km

ICRA has revised its forecast for road execution by the Ministry of Road Transport and Highways (MoRTH) in FY2025 to 10,000–10,500 km, down from its earlier estimate of 12,500–13,000 km. The General Elections in Q1 FY2025 and prolonged monsoons in certain regions, which reduced the number of productive days, have contributed to a decline in road execution during that period. This trend is already evident in the execution achieved during the first eight months (8M) of FY2025. Spending by the Road Ministry also stood lower at 55% of the FY2025 Budget Allocation (BA) in 8M FY2025, compared to 66% of the BA in the same period of the previous fiscal year.
Vinay Kumar G, Vice President & Sector Head - Corporate Ratings, ICRA, said, “Road execution declined by 6%, reaching 4,761 km in 8M FY2025 compared to 5,248 km in 8M FY2024. Despite expectations of a healthy pick-up during the remainder of the year, overall execution is likely to decline in FY2025. The fourth quarter accounts for a significant portion of execution. Historically, the last four months of the year accounted for 51–58% of execution during the past four years, with the figure standing at 58% in FY2024. Assuming a similar trend during the last four months of the current year, execution is expected to touch 10,000–10,500 km in FY2025.”
Road awards are projected to be in the range of 8,500–9,000 km in FY2025, according to ICRA’s estimates, aligning closely with last year’s awarding of 8,581 km. In 8M FY2025, road awards stood at around 2,250 km, compared to 2,816 km awarded in 8M FY2024, amid ongoing uncertainty about the mode of project awarding and the impact of General Elections in H1 FY2025. Project awarding gained momentum from November 2024, following increased clarity from MoRTH in Q2 FY2025. The Ministry awarded 773 km in November 2024, compared to 221 km in November 2023 and the average monthly award of 316 km in 8M FY2025.
“The order books of road-focused contractors have moderated in the past 4–6 quarters as awarding activity has slowed, particularly from MoRTH. Additionally, competition remains elevated in the road sector, with road developers bidding aggressively to secure orders, which will impact profitability metrics. Since it takes 6–9 months from project awarding to on-ground execution (first billing milestone), the slowdown in awarding will also affect the execution momentum and revenue growth of road developers in the near-to-medium term,” Kumar added.