Key Points
If the recent trends of cashflow challenges and weak orders are anything to go by, Prime Minister Narendra Modi's governments thrust on road and highway projects will continue on a muted footing until the 2024 general elections...
A report by Nomura Research on Monday showed that the pace of highway awarding by state and central governments has been weak in the last financial year and also in April this calendar year..
Ahead of the general elections, the central government intends to accelerate the construction of roads in FY24 by 16-21 per cent, with a focus on execution of projects under various stages of execution, ICRA had said in a report earlier in May...
With the cost of all key raw materials elevated in comparison to pre-Covid levels, the cost of construction has also seen a sharp rise.. The prices of steel, cement, diesel and bitumen are 50 per cent, 14 per cent, 36 per cent and 46 per cent higher than the pre-COVID average, data shows.. Nomura estimates that the cost of the Bharatmala project is now perhaps over 2 times the original estimates by the NHAI...
Amid a scenario of a potential slowdown in ordering which can limit the rise in earnings, debt levels may remain elevated, posing further risks to the sector, Nomura said..
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