Pace of road construction outpaces awarding in January, likely to improve further in fourth quarter

The pace at which national highways are being constructed has gained momentum. In the six months to January 2023, it has outpaced the rate at which the National Highway Authority of India (NHAI) has been awarding the projects. The construction of highways has grown by more than two times while the awarding by NHAI has risen by 1.5 times during the period.

Construction of national highways grew to 1,029 kms in January 2023 from 419 kms in August 2022. In the same period, the awarding of highway projects by NHAI improved to 1,137 km from 731 km.

Analysts expect the pace of road construction to improve further in the March 2023 quarter as the Ministry of Road Transport and Highways of India increases the extent of projects to be awarded during the final quarter of the fiscal year to meet the annual target. The construction of national highways is likely to improve by nearly 15% in FY23.

Among the listed construction companies, those with superior execution track record are placed well to secure incremental projects. Analysts are optimistic about KNR Constructions, PNC Infratech and Ashoka Buildcon. Recently, each of these players grabbed national highway projects worth close to Rs2,000 crore. Besides, these companies have diversified beyond the road segment by securing orders from departments including water, metro rail, and railways. This provides a high visibility of revenue growth for these companies.