FY 2022 Outlook For The Construction Sector Remains Stable

The construction sector is on a recovery path and the outlook for the sector remains stable, ICRA has stated in its latest report.

"Adequate order book position and lower base effect in FY2021 is expected to result in healthy revenue growth in FY2022. Operating profitability is likely to remain stable," ICRA has noted.

According to government measures like partial release of bank guarantees, retention money, lower BG requirement, etc., are likely to support working capital and liquidity of EPC contractors. As these measures would start reflecting in FY2021 end balance sheet, the working capital cycle is expected to improve in FY2021 and remain stable in FY2022, ICRA has stated.

Working capital cycle and liquidity

According to ICRA, government measures like partial release of bank guarantees, retention money, lower BG requirement, etc., are likely to support working capital and liquidity of EPC contractors.

"As these measures would start reflecting in FY2021 end balance sheet, the working capital cycle is expected to improve in FY2021 and remain stable in FY2022," ICRA has stated.

With improvement in execution, stable profitability, and improvement in liquidity and working capital cycle, the leverage and coverage ratios are likely to improve in FY2022, the rating agency has said.