Stable outlook for construction business

The increase in the government spending on infrastructure projects has resulted in robust order inflow for the construction companies and the trend is expected to continue in the new year. This is the major takeaway of the recently released year end assessment report by the credit rating and research agency ICRA.

“The construction companies are likely to witness significant opportunities from the railways, ports, urban infrastructure and airport segments. In the Railways segment, besides the core railway capex (doubling, new lines, signalling, electrification, etc), the station redevelopment, and the recently announced bullet train project is expected to provide significant opportunities to the construction companies. Similarly, in the road sector, adequate pipeline of projects for development/upgradation of the national highways and state highways exists. The Bharatmala Pariyojana project itself is expected to provide large opportunities for the construction sector as the programme is the largest road development programme in India with a planned investment of Rs. 5.35 trillion,” the report says.

With a huge pipeline of projects to be awarded in the infrastructure sector, ICRA expects the new order inflows for construction companies to remain healthy, albeit there can be a slowdown in the pace of order tendering in the months closer to the Lok Sabha general elections due to be held in April/May 2019.

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