Awarding of new road projects increases sharply to 5,113 km in March

The length of road projects awarded by the National Highway Authority of India (NHAI) and the Ministry of Road Transport and Highways (MoRTH) together increased a little over two times to 5,113 kilometres (km) in March 2022 from the year ago.

It was nearly six times higher than 735 km of the road length awarded in the previous month. With this, the total length of projects awarded in FY22 increased by 22% year-on-year to nearly 12,731 km.

According to analysts, the government has increased the pace of awarding of roads projects after the elections in five states. That would also help MoRTH to achieve its target for the full year.

While the awarding of projects improved, their execution was slower during the past fiscal year due to shortage of labour, funding issues and delayed payments by the government. The pace of road construction reduced by 21% to 10,457 km in FY22 from the previous year while average daily construction fell by 21.4% to 28.6 km.

In the coming quarters, analysts estimate that select road construction companies which follow asset-light business model, which helps them maintain stronger balance sheets, would receive a premium from the street. Such well diversified companies in terms of the order book include KNR Constructions and PNC Infratech.