Construction Mirror Article detail

The pace of road construction in the country is expected to improve in FY24 given the speed at which projects are being awarded and their execution. This is expected to help a handful of construction companies that have demonstrated efficient execution in the past.The combined construction of roads by National Highway Authority of India (NHAI) and Ministry of Roads, Transport and Highways (MoRTH) improved by 12.7% to 6,684 km in January- May 2023 period compared with the corresponding period in the previous year.The improvement in road construction owes to the low base of awarding in the past two fiscal years. Historically, construction gains pace after three years of awarding of roads projects. In FY20, the combined awarding of road projects by NHAI and MoRTH was close to 10,500 km. The construction of roads jumped to 2,929 km in March 2023 from 1,452 km in March 2020. In FY23, the combined awarding of NHAI and MoRTH was 12,375 km.In FY23, the average length of roads constructed per day was 30.1 km. If the present momentum in the construction of roads continues, analysts estimate that the average length of roads constructed per day will jump to 33 km in FY24.Among the road construction companies, KNR Constructions and PNC Infratech are likely to benefit from higher awarding of road projects given their strong balance sheet and superior execution capabilities. Analysts estimate that revenues of these companies are likely to grow by 12-15% in the next two years.