New Delhi, Jan 6 (Mayank Nigam) Research and rating firm ICRA on Monday lowered the revenue growth estimate for construction players for the ongoing fiscal 2024-25 (FY25) to 8-10% from 12-15% earlier citing slowdown in construction activities during the first half (H1) of the year primarily on account of general elections and extended rainy season. The rating firm, however, expects the execution pace of Indian construction entities to pick up in the second half of the year (H2) and operating income to grow on a year-on-year basis by 8-10% in FY25 and 10-12% in FY26. Previously, in FY23 and FY24, the construction entities had witnessed stellar year-on-year growth of 22% and 19%, respectively.
“The Model Code of Conduct in Q1 FY2025 and an elongated monsoon period, along with milestone-based billing (against monthly billing till March 2024) in Q2 FY2025 impacted construction activity (primarily for road players). This is reflected in the modest revenue growth of 1.5% in year-on-year (YoY) terms in H1 FY2025 for ICRA’s sample set of 19 companies (with combined turnover of Rs 1.28 trillion in FY2024),” ICRA said.
Giving more insights on this, Suprio Banerjee, Vice President and Co-Group Head – Corporate Ratings, ICRA, said that the fresh order inflows were modest in H1 FY2025, mainly due to the impact of the general elections and the monsoons. “Though the order-awarding activity has picked up from Q2 FY2025 onwards, the order inflows in FY2025e are likely to trail those seen in FY2024. Order inflows in the road segment have remained muted during the last four quarters; however, in other segments like urban transportation (including metro), drinking water and sewage treatment projects, the inflows remain healthy,” Banerjee said.