Deal activity in infrastructure space sees a sharp rise in May

The deal activity in the infrastructure space in India saw a sharp rise in the month of May while new investments announced rose by 38.3% on a year-on-year basis, data shows.

As per a report by research firm Nomura, a flurry of deal flows and investments were seen in the renewable and new energy, mobility segments in May while the logistics space saw significant fund-raising.

In May, Greaves Cotton’s arm Greaves Electric Mobility bagged investments up to $220 million from a Saudi investor Abdul Lateef Jamil while UAE-based IHC will be investing Rs 154 billion across Adani Enterprises & Adani Green and Adani Transmission for the development of 45GW of renewable energy and infra.


Royal Dutch Shell agreed to buy Sprng Energy, ABB will acquire a 72% stake in Numocity for EV charging in India while Delhivery raised Rs 23.66 billion in a funding round from anchor investors.

Tata Projects will be developing phase-I of the Noida (Jewar) International Greenfield Airport Project on EPC basis at an estimated cost of Rs 45.88 billion.

New investments rise
New investments announced in May rose by 38.3% on an annual basis to Rs1,384.6 billion (up 8.5% MoM). This was primarily led by an increase in irrigation, manufacturing and water space, which was partially offset by a decrease in the power, and power distribution space, as per Dolat Capital.

Among new investments, the manufacturing segment saw a major portion with a 31.7% share, while roads and real estate’s share stood at 17.2% and 12.4% respectively.

When it comes to roads & highways, the Ministry of Road Transport and Highways (MORTH) awarded tenders for the construction of 295 km of National Highways in May as compared to the 352 km awarded in May 2021 and 487 km awarded in May 2020.

The long-term tendering activities by NHAI increased from 2,222 km in FY19 to 4,788 km in FY21 to 6,306 km in FY22. The capital expenditure by NHAI has reached an all-time high of Rs 1,68,770 crore, as per ICICI Direct.

“Major players remained conservative on bidding stage and witnessed modest order inflows in the recent times as tendering norms were eased since H2FY21, which led to higher competitive intensity. With the expectations of NHAI going back to normal bidding norms and continued strength in awarding actions, organised developers are likely to witness healthy inflows tractions,” the firm said.

Companies have also been wary of the rising commodity prices. Steel prices are up 2.4% for Q1FY23 in comparison with the previous quarter while cement prices have risen sharply to peak levels. The increase in commodity prices affected the margin performance in FY22 but only marginally as they were protected by the built-in escalation clauses in most of NHAI’s projects.

“Margins are expected to normalise, going forward, with softening in key raw material prices such as steel and cement,” ICICI Direct said.