+
National Highways Construction to Drop 7-10% in FY25: CareEdge Ratings
ROADS & HIGHWAYS

National Highways Construction to Drop 7-10% in FY25: CareEdge Ratings

The pace of National Highway construction in India is expected to slow by 7-10 per cent in FY25, with the estimated completion dropping from 12,350 km in FY24 to around 11,100-11,500 km in FY25, averaging nearly 31 km per day. This decline is primarily due to challenges in execution, increased competition, and significant delays in receiving appointed dates after project awards.

Approximately 55 per cent of the under-construction projects, valued at Rs 0.1 million with a combined bid project cost (BPC) of Rs 1 trillion, have been delayed by over six months. This is mainly attributed to escalating execution hurdles, a more competitive environment, and delays in project scheduling after award announcements.

CareEdge Ratings also conducted an extensive financial analysis of 17 sponsors and EPC contractors involved in Hybrid Annuity Model (HAM) projects. Despite a 14% compound annual growth rate (CAGR) in total operating income (TOI) between FY21 and FY24, reduced project awards in FY24 and H1FY25 have significantly decreased revenue prospects.

The order book-to-TOI ratio has dropped from 2.78x in FY22 to 2.15x in FY24, reflecting a much smaller executable order book, with many projects still awaiting appointed dates. Operating profitability is expected to decrease by 200 basis points in FY25, due to heightened competition and rising overhead costs.

Additionally, the discontinuation of the Atma Nirbhar Bharat scheme for monthly payments is likely to extend the working capital cycle by 15-20 days in FY25, placing further strain on developers. The Hybrid Annuity Model continues to dominate, accounting for nearly 55 per cent of the total projects awarded between FY21 and FY24, with a combined BPC of over Rs 4.03 trillion across 374 HAM projects.

News source: The Free Press Journal

The pace of National Highway construction in India is expected to slow by 7-10 per cent in FY25, with the estimated completion dropping from 12,350 km in FY24 to around 11,100-11,500 km in FY25, averaging nearly 31 km per day. This decline is primarily due to challenges in execution, increased competition, and significant delays in receiving appointed dates after project awards. Approximately 55 per cent of the under-construction projects, valued at Rs 0.1 million with a combined bid project cost (BPC) of Rs 1 trillion, have been delayed by over six months. This is mainly attributed to escalating execution hurdles, a more competitive environment, and delays in project scheduling after award announcements. CareEdge Ratings also conducted an extensive financial analysis of 17 sponsors and EPC contractors involved in Hybrid Annuity Model (HAM) projects. Despite a 14% compound annual growth rate (CAGR) in total operating income (TOI) between FY21 and FY24, reduced project awards in FY24 and H1FY25 have significantly decreased revenue prospects. The order book-to-TOI ratio has dropped from 2.78x in FY22 to 2.15x in FY24, reflecting a much smaller executable order book, with many projects still awaiting appointed dates. Operating profitability is expected to decrease by 200 basis points in FY25, due to heightened competition and rising overhead costs. Additionally, the discontinuation of the Atma Nirbhar Bharat scheme for monthly payments is likely to extend the working capital cycle by 15-20 days in FY25, placing further strain on developers. The Hybrid Annuity Model continues to dominate, accounting for nearly 55 per cent of the total projects awarded between FY21 and FY24, with a combined BPC of over Rs 4.03 trillion across 374 HAM projects. News source: The Free Press Journal

Related Stories

Gold Stories

Next Story
Infrastructure Transport

97 Per Cent Of Rongjeng-Mangsang-Adokgre Road Nears Completion

Deputy Chief Minister in-charge of public works Prestone Tynsong said in Shillong on 26 August that 97 per cent physical progress had been achieved on the ongoing Rongjeng-Mangsang-Adokgre road being constructed under the Non-Lapsable Central Pool of Resources (NLCPR). He noted the project was sanctioned in 2017 and that the stipulated time for completion had been 24 months from issue of the final work order. The deputy chief minister informed the assembly that the government had decided to include the remaining work under a World Bank project. In reply to a query from Rongjeng MLA Jim M Sangm..

Next Story
Infrastructure Transport

First TBM Starts Digging Five Point Three Kilometre Tunnel Under SGNP

The Goregaon-Mulund Link Road (GMLR) Phase three (B) project has reached a key milestone as the first tunnel boring machine (TBM) began excavation of the first of two tunnels beneath the Sanjay Gandhi National Park (SGNP). The machine, named Tulsi, started cutting a five point three kilometre bore that will link Dadasaheb Phalke Chitranagari in Goregaon East with Amar Nagar in Mulund West. Officials issued a statement noting the commencement of tunnelling work under the protected green belt. The twin tunnels are being constructed using mechanised tunnelling methods that aim to limit surface di..

Next Story
Infrastructure Transport

UP Approves Two Expressways And Rs 240 bn Infrastructure Push

The Uttar Pradesh Cabinet approved a series of infrastructure and industrial investment proposals totalling Rs 240 billion (Rs 240 bn), including two major expressway projects, a manufacturing and logistics cluster in Sultanpur and incentives for 11 industrial projects across the state. The decisions, taken at a meeting chaired by Chief Minister Yogi Adityanath, underline the state government’s focus on expanding road connectivity around emerging industrial hubs while attracting manufacturing investment to districts beyond major urban centres. The approvals cover both greenfield expressway c..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

SPECIAL OFFER
QR Code