Nuvama Research said road project awards by the National Highways Authority of India (NHAI) rose sharply in August, though funding concerns were weighing on the sector outlook. The authority awarded eight projects spanning around 95 km in August, representing a rise of 621 per cent year-on-year from 13 km in August the previous year. Awards were, however, down from 127 km in July.

Cumulatively, NHAI awarded around 329 km in the financial year to date, up 69 per cent year-on-year, the report noted. Nuvama added that the increase in August needed to be viewed against a backdrop of subdued awarding activity in recent years, with the authority having awarded 3,124 km in FY26 and 4,008 km in FY25 while missing a full-year target of around 4,500 km.

Road construction activity showed signs of strain, with construction falling 12 per cent year-on-year and 21 per cent month-on-month to 182 km in August. Construction during the first four months of the financial year stood at around 1,053 km, down 24 per cent from the year-ago period.

Media reports cited by Nuvama indicated that NHAI plans to award 5,200 km of road projects in FY27, up 66 per cent year-on-year, while construction was targeted at 4,950 km, down 7 per cent. The brokerage remained cautious about whether awarding activity could sustain a meaningful recovery, pointing to the absence of an increase in NHAI's budgeted outlay for FY27 as a factor that accentuates concerns around road awards.

The report noted that the broader road sector allocation for FY27 increased eight per cent to Rs 2.94 trillion (tn) after remaining broadly flat for two years, while NHAI's own budgetary support remained unchanged at Rs 1.87 tn and projected internal and extra-budgetary resources were nil. Nuvama said the government appeared cautious about increasing NHAI's debt and that the authority was likely to rely more on asset monetisation through toll-operate-transfer and infrastructure investment trust routes, leaving a recovery dependent on funding availability and improved project execution under current constraints.