Motilal Oswal - MOSL: THEMATIC | ROADS- Time to speed up-Enablers in place-opportunity sizeable

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Motilal Oswal

MOSL: THEMATIC | ROADS- Time to speed up-Enablers in place-opportunity sizeable

â€‹THEMATIC | ROADS: Time to speed up; Enablers in place; opportunity sizeable

For the last three years, the government has been ironing out issues hampering the Roads sector. It has cleared bottlenecks through suitable policy changes.
Predefined programs are now in place, entailing an investment of INR7t. Early signs of revival in the sector have been evident for some time now.
Players with strong balance sheet, execution track record, and robust asset portfolio would be the key beneficiaries. Our top picks are Sadbhav Engineering, Ashoka Buildcon and KNR Construction.

Multiple steps taken by government to revive sector

The Roads sector has been identified as one of the top-3 capex themes by the current NDA government. The Ministry of Road Transport and Highways (MORTH) has taken multiple steps to revive the ailing sector over the last three years. We believe the framework required for the speedy award and execution of projects is in place. We expect activity to pick up, with the government addressing issues like:

Execution hurdles â€“ awarding projects after 80% land acquisition under BoT and 90% land acquisition under EPC
Funding arrangement â€“ cess trebled from INR2/liter to INR6/liter; market borrowing plans in place
Faster forest and environmental clearances
Change in project model to ease funding burden of cash-strapped developers
Exit policy for developers to help unlock equity from completed projects, making it potentially available for investment in new projects
Premium deferment scheme to ease cash flow issues faced by developers

31/10/2017 80 EN

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Motilal Oswal

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MOSL: THEMATIC | ROADS- Time to speed up-Enablers in place-opportunity sizeable

MOSL : HOME FIRST FINANCE COMPANY: Earnings in-line with sustained improvement in asset quality

MOSL : SHOPPERS STOP: Ticking the right boxes

MOSL : ERIS LIFESCIENCES: Enhanced efforts toward product launch-related activities

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