Motilal report: NHAI grants 6,003 km of highway projects in FY23

19 May 2023 CW Team

Five states, namely AP, Bihar, UP, Jharkhand, and Telangana, made up 54 per cent of the total value of projects awarded in FY23, according to the brokerage report. The infrastructure sector will remain in focus due to consistent efforts of asset monetisation and the softening of input prices, which will improve the margins of many infrastructure players in FY24, stated Motilal Oswal.

According to the report, the increased budget allocation for roads (+25 per cent YoY) in the Union Budget of FY24 raises expectations for improved awarding in the future. The central government intends to accelerate the construction of roads in FY24 by 15-20 per cent with a healthy pipeline of projects and an increase in the capital expenditure outlay.

HAM projects continued to dominate project awarding in terms of the length of projects awarded (3,351 km in FY23 vs 3,493 km in FY22) and the value of projects awarded (Rs 855 billion in FY23 vs Rs 1 trillion in FY22). In terms of the number of projects, a total of 116 projects were awarded under the EPC mode in FY23, followed by 96 projects under the HAM mode.

In recent years, there has been intense competition for EPC projects due to the relaxation of pre-qualification criteria following the Covid-19 pandemic. This led to heightened competition for HAM projects as well. This trend is evident from the growing number of bidders for HAM projects. The report further stated that asset monetisation gathered pace in FY24, with NHAI Infra Investment Trust (NHAI InVIT) aiming to raise Rs 75-80 billion in the third round of asset monetisation.

In the previous two rounds, NHAI InVIT successfully raised Rs 94.3 billion in total during FY22 and FY23. Furthermore, NHAI InvIT raised an additional Rs 15 billion through the issuance of non-convertible debentures (NCDs) in October 2022. In FY24, NHAI intends to monetise 1,987 km of highways and has identified 30 national highway sections as part of its plan.

NHAI plans to monetise 1,987 km of highways through ToT/InvIT/toll securitisation modes in FY24 and has identified 30 national highway sections for the same purpose. In FY23, NHAI aimed to monetise 14 highway sections covering 1,750 km and realised Rs 104 billion from the 487.7 km of road assets it managed to monetise.

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The infrastructure project awarding activity picked up and gathered pace in Q4 of FY23, with NHAI awarding a total of 6,003 km of projects in FY23, significantly below its FY23 target of 6,500 km, as stated in a report by Motilal Oswal Financial Services. According to the report, the total value of projects awarded by NHAI was Rs 1.26 trillion in FY23, down 15 per cent YoY. Highway developer NHAI's highway construction pace increased by 13 per cent YoY to 4,882 km in FY23. Out of these, Andhra Pradesh (AP) received the highest number of projects (32), accounting for 16 per cent of the total value of projects awarded. Five states, namely AP, Bihar, UP, Jharkhand, and Telangana, made up 54 per cent of the total value of projects awarded in FY23, according to the brokerage report. The infrastructure sector will remain in focus due to consistent efforts of asset monetisation and the softening of input prices, which will improve the margins of many infrastructure players in FY24, stated Motilal Oswal. According to the report, the increased budget allocation for roads (+25 per cent YoY) in the Union Budget of FY24 raises expectations for improved awarding in the future. The central government intends to accelerate the construction of roads in FY24 by 15-20 per cent with a healthy pipeline of projects and an increase in the capital expenditure outlay. HAM projects continued to dominate project awarding in terms of the length of projects awarded (3,351 km in FY23 vs 3,493 km in FY22) and the value of projects awarded (Rs 855 billion in FY23 vs Rs 1 trillion in FY22). In terms of the number of projects, a total of 116 projects were awarded under the EPC mode in FY23, followed by 96 projects under the HAM mode. In recent years, there has been intense competition for EPC projects due to the relaxation of pre-qualification criteria following the Covid-19 pandemic. This led to heightened competition for HAM projects as well. This trend is evident from the growing number of bidders for HAM projects. The report further stated that asset monetisation gathered pace in FY24, with NHAI Infra Investment Trust (NHAI InVIT) aiming to raise Rs 75-80 billion in the third round of asset monetisation. In the previous two rounds, NHAI InVIT successfully raised Rs 94.3 billion in total during FY22 and FY23. Furthermore, NHAI InvIT raised an additional Rs 15 billion through the issuance of non-convertible debentures (NCDs) in October 2022. In FY24, NHAI intends to monetise 1,987 km of highways and has identified 30 national highway sections as part of its plan. NHAI plans to monetise 1,987 km of highways through ToT/InvIT/toll securitisation modes in FY24 and has identified 30 national highway sections for the same purpose. In FY23, NHAI aimed to monetise 14 highway sections covering 1,750 km and realised Rs 104 billion from the 487.7 km of road assets it managed to monetise. Also Read NMMC's road concretisation enhances infra in MIDC regionHyderabad's Megha Engg wins Rs 144 bn Thane-Borivali tunnel tender

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