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FY23 Construction Outlook: Order Book Momentum to Offset Margin Pressures: IndRa

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India Ratings and Research (Ind-Ra) has revised the construction sector outlook to neutral for FY23 from improving for FY22. Ind-Ra has maintained a stable rating Outlook on its rated construction companies for FY23, except for the ones facing specific state governments with a weak fiscal profile. The neutral sector outlook reflects the expectation of a continued uptick in business activities for engineering, procurement and construction (EPC) players, which are likely to have registered 19% yoy revenue growth because of order execution in FY22 post registering two consecutive years of a revenue decline owing to the COVID-19 pandemic and unseasonal high rainfalls. For the purpose of this report, Ind-Ra has considered all its rated EPC companies excluding Larsen and Toubro due to its large scale which would otherwise have skewed the report analysis.

 
FY23 Construction Outlook: Order Book Momentum to Offset Margin Pressures: IndRa

Healthy Budgetary Allocations, Uptick in Tendering Activities: Order inflows in most subsectors have seen a significant upswing during FY22 with tendering activity gaining momentum, supported by the rich budgetary allocations made by the central government for FY22. FY22's order inflows were also supported by a recovery seen in the capex activities of most state governments towards economic activities, which had remain muted in FY20 and FY21 owing to the slowdown in economic activity and due to the impact of pandemic. With overall tenders announced growing over 11%yoy in FY22 along with continued significant central government budgetary allocations for FY23, order book visibility is likely to remain robust in the medium term.

Read more about: construction
Story first published: Thursday, May 5, 2022, 14:26 [IST]
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