Sizeable equity commitments in under-construction projects and rising working capital requirements will increase the debt burden of road developers, though revenue growth will also be high in the next two fiscals driven by strong awarding and execution, together with significant budgetary allocation to the sector. All the same, with the leverage level low at present, developers have headroom to borrow, which would keep their credit risk profiles stable. Asset monetisation will be crucial to rein in debt at comfortable levels. A CRISIL Rating analysis of 18 EPC players, constituting 70 per cent of the sector revenue, indicates as much. Says Mohit Makhija, Senior Director, CRISIL Ratings, “Total equity commitment towards under-construction PPP projects is estimated at over Rs 210 billion by fiscal 2025. Further, the working capital requirements are expected to increase with expected strong revenue growth of 10-15 per cent over the next two fiscals and rollback of liquidity support provisions under the Atmanirbhar Bharat package. Accruals will fund ~45 per cent of these incremental outflows, while the balance is expected to be funded through asset monetisation and debt. Consequently, the debt of the sample set is expected to inch up to Rs 300 billion as of March 2025 from Rs 170 billion as of March 2022.”