Highway traffic rises but full recovery may take another quarter

Firms attribute sluggishness to monsoon, local lockdowns

More vehicles are plying on the country’s highways now compared to April and May. However, what the traffic data also suggests is uneven recovery, signs of the improvement tapering and a wait for monsoon to end and trade to pick up for a full recovery.

Road developers are also pinning hopes on the last two quarters for a full recovery and a year-on-year (YoY) growth in traffic numbers.

In a recent report, rating agency ICRA noted the e-way bills generated in the first two weeks of August was at 91 per cent of the same period in the previous year. The improvement is significant compared to 47 per cent in May. The note added that if the pace of recovery is sustained, the overall reduction in toll collections for national highway projects could be less than 10 per cent for the full year.

However, the recovery also shows signs of slowing down, as bills generated for June were already at the 93 per cent mark. Is traffic improvement tapering? Road developers attribute the sluggishness to monsoon and local lockdowns. “Toll collections have reached more than 90 per cent of the quarter-on-quarter tolling. This is mainly driven by commercial traffic rather than personal car traffic. Traffic has tapered in August. This is due to the monsoon impact. We should expect H2FY21 to have YoY growth in toll,” said Satish Parakh, managing director of Ashoka Buildcon.

Virendra Mhaiskar, chairman and managing director, IRB Infrastructure Developers, said, “With the onset of Diwali and by the end of the third quarter, we should be back to the pre-Covid levels and I am expecting some growth in the last quarter.”

For companies like GMR Infrastructure, the trend in traffic improvement is similar. According to information available in its presentation, the Hyderabad-Vijayawada route recorded 84 per cent of the pre-Covid traffic in August, which was at 85 per cent in July. For the Ambala to Chandigarh expressway, traffic was at 78 per cent of pre-Covid in August, against 75 per cent in July.

ICRA, in its report, noted that the unabated rise in Covid-19 infections in the unlock phase, localised re-imposition of lockdowns in several states, and heavy monsoon in many parts of the country interrupted recovery in the first fortnight of July.

Recovery has also been uneven, varying from region to region. Mhaiskar disagrees that improvement is tapering. He said, “Many of our projects have reached 85 to 90 per cent. Few others, like in Maharashtra, where traffic was weak, are also starting to improve as e-pass restrictions have been removed.”

States like Tamil Nadu, ICRA added, saw localised lockdowns imposed. It had adversely affected toll collections in July, which was 65 per cent to 75 per cent of the pre-Covid levels.

Executives from PNC Infratech now expect full recovery post-monsoon. “Collections continue at 90 per cent of pre-Covid levels, largely due to return of commercial traffic. Return to pre-Covid level is expected only post-monsoon,” analysts with Anand Rathi noted in a report on the company in August. According to the note, the company had hit 90 per cent recovery by June-end.