New Delhi: Road making companies in the EPC (engineering, procurement and construction) business may see their revenue growth go down to almost half in the current financial and the next one.
The revenue growth can hit 15 percent mark in financial years 2019-2020 and 2020-21 from about 30 percent in 2018-2019 fiscal, says a study by credit rating agency CRISIL.
The drop in revenue growth would be mostly on account of slower awarding of road projects from National Highways Authority of India (NHAI).
“The NHAI awarded 7,400 km in fiscal 2018, which slowed down the following year to about 2,200 km. In the current fiscal and the next, awarding is expected to be 4,000 km a year. The delay in declaring appointed dates for the projects awarded, on the other hand, is primarily due to issues in land acquisition. CRISIL’s analysis of 119 hybrid annuity model (HAM) projects shows almost 30 percent of these have not received appointed dates more than a year after these were awarded,” said Sachin Gupta, Senior Director, CRISIL Ratings.
However, the drop in revenue growth is not likely to impact credit profiles of the road construction companies.