Order flow in construction & infra sector to improve only gradually
The construction and infrastructure sector is gradually recovering from the aftermath of Covid.
According to a report by Dolat Capital Markets Pvt Ltd, new investments announced rose for the second month in a row by 9.1% year-on-year to ₹84200 crore in August. The growth was primarily led by increase in roads, manufacturing, power but was partially offset by fall in irrigation. New investments announced in year-to-date basis so far in fiscal year 2022, increased 104.4% year-on-year to Rs5,80,200 crore.
However, on a month-on-month basis, new investments in this sector is still down by around 43%.
The report said that roads segment saw a major portion of new investments with 26.1% share followed by manufacturing/ real estate at 24.9%/ 13.2% in August. among states, higher concentration of new investments announced was seen in Gujarat with 11.9% share followed by Jharkhand with 11.2% share.
Tenders issued also increased for the second month in a row by 54.9% y-o-y to ₹61,800 crore in August, led by road/ community/railways. On a year-to-date basis in FY22, tenders published increased 7.9% y-o-y to ₹2,97,500 crore. Major tenders published are in the road, railways and community sectors with 41.5%, 13.5% and 12.4% share respectively, said the report. Rajasthan had the highest share of 9.3% followed by Uttar Pradesh with 8.9% share.
Furthermore, order awarded rose 1.3% y-o-y to ₹39,300 crore led by power/water segment which was partially offset by irrigation/mining. Projects awarded on a YTD basis in FY22, increased 37.2% y-o-y to Rs1,53,600 crore.
Power, roads and railways comprised 34.9%, 26.1%, 16.4% respectively of total orders awarded in August. Highest concentration of orders occurred in Karnataka with 10.9% share followed by Punjab with 6.5% share, added the report.