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

Next Story
Infrastructure Urban

Reliance, Diehl Advance Pact for Precision-Guided Munitions

Diehl Defence CEO Helmut Rauch and Reliance Group’s Founder Chairman Anil D. Ambani have held discussions to advance their ongoing strategic partnership focused on Guided and Terminally Guided Munitions (TGM), under a cooperation agreement originally signed in 2019.This collaboration underscores Diehl Defence’s long-term commitment to the Indian market and its support for the Indian Government’s Make in India initiative. The partnership’s current emphasis is on the urgent supply of the Vulcano 155mm Precision Guided Munition system to the Indian Armed Forces.Simultaneously, the “Vulc..

Next Story
Infrastructure Urban

Modis Navnirman to Migrate to Main Board, Merge Subsidiary

Modis Navnirman Limited has announced that its Board of Directors has approved a key strategic initiative involving migration from the BSE SME platform to the Main Board of both BSE and NSE, alongside a merger with its wholly owned subsidiary, Shree Modis Navnirman Private Limited.The move to the main boards marks a major milestone in the company’s growth trajectory, reflecting its consistent financial performance, robust corporate governance, and long-term commitment to value creation. This transition will grant the company access to a broader investor base, improve market participation, en..

Next Story
Infrastructure Urban

Global Capital Flows Remain Subdued, EMEA Leads in Q1 2025

The Bharat InvITs Association’s industry update for Q1 2025 shows subdued global capital flows, with investment volumes remaining at the lower end of the five-year range despite a late 2024 recovery. According to data from Colliers and MSCI Real Capital Analytics, activity in North America declined slightly, while EMEA maintained steady levels and emerged as the top region for investment in standing assets.The EMEA region now hosts seven of the top ten cross-border capital destinations for standing assets, pushing the United States’ share of global activity below 15 per cent. Meanwhile, in..

Advertisement

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Advertisement

Talk to us?