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MOSL: INFRASTRUCTURE-Exciting business prospects ahead-Execution on track; awarding activity to pick up

INFRASTRUCTURE: Exciting business prospects ahead; Execution on track; awarding activity to pick up

 

The government’s recent press release indicates strong awarding activity for February-March 2018, with live tenders of 7,768km (INR1.4t) intended to be finalized by March 2018. Incrementally, another 1,000km is planned to be added in February 2018, taking project tenders available for finalization to 8,768km. Assuming NHAI is able to finalize and award 30-50% of these live tenders, awarding activity for the year could take a quantum leap – 30-60% growth in FY18. If NHAI’s awarding activity picks up meaningfully in February-March 2018, as has been the historical trend, EPC players like Sadbhav, Ashoka, KNR, Dilip and PNC would be the key beneficiaries.

•  Awarding activity muted so far, belying expectations: NHAI's awarding activity till January 2018 was muted, with orders of 2,697km (INR422b) being awarded. It has set a target to award projects of 10,000km for FY18 - the required run rate to award projects for the balance two months stands at 7,309km. Muted awarding activity can be attributed to delays in land acquisition. NHAI now awards projects after 80% of the land has been acquired to ensure that the execution of projects does not suffer. For FY17, NHAI awarded 4,335km.
• EPC the preferred mode of awarding; current focus on the eastern region: Of 2,697km of projects awarded by NHAI, 68% (1,834km worth INR238b) of the tenders were awarded on EPC basis, 28% (754km worth INR169b) on HAM basis and 4% (109km worth INR16b) on BoT basis. Projects in the eastern and north-eastern regions have been given priority - 38% of the projects awarded are in the eastern and north-eastern regions. 20% of the projects are in the western region, 16% in the southern region, 14% in the northern region and 13% in the central region.