Rising order inflows, execution to help road infrastructure companies

Execution is likely to improve sharply in H2FY25 after some pickup in Q2FY25. Only 95 kilometres (km) of projects were awarded in Q1FY25 versus a full-year target of 5,000 kilometres

Road awards were muted in Q1FY25. But the pace will accelerate with a bidding pipeline of Rs 1.1 trillion (September 2024), mostly dominated by HAM (Hybrid Annuity Model) projects, which contribute 47 per cent and engineering procurement and construction or EPC projects, which have about 36 per cent share.

Hence, infrastructure companies mostly reported revenue decline on a year-on-year (Y-o-Y) basis in Q1FY25. For example, KNR constructions and GR Infraprojects (GRIL) saw revenue declines of 30 per cent and 12 per cent respectively Y-o-Y. The gains recorded in terms of operating or net profit by road companies