NHAI awarded eight projects during April-July 2023, up from 12 in FY23
According to Motilal Oswal Financial Services, During April to July 2023, total eight projects were awarded by NHAI versus 12 projects awarded in the corresponding period of FY23. During April to July 2023, the total length of awarded projects stood at ~160km (250km in April to July 2022) with a value of Rs 25 billion.
As of August 2023, project awarding by NHAI stood at of 170km and construction stood at 1,215km. HAM projects continued to dominate project awarding in terms of value and volume of the awarded projects (73km awarded worth Rs 19 billion over April to July 2023)
FAStag toll collections improved 14.4% YoY during April 2023 to July 2023, while collection value increased by 21.7% YoY. Higher toll collections play a crucial role in expediting the monetization of road assets by the Ministry. Additionally, it benefits companies seeking to monetize their existing toll assets.
Asset monetization in focus
NHAI has drawn up a list of 46 projects of over 2,612km for monetization in FY24. During FY24, NHAI aims to raise Rs 100 billion to R 150 billion through asset monetization under the ToT strategy. In total, NHAI aims to generate up to Rs 450 billion through monetization in FY24 via ToT and additional funding models such as Infrastructure Investment Trust and the securitization of road assets constructed by NHAI’s SPVs.
Steel prices have decreased by ~25%, while aluminium prices have declined by ~33% since April 22. On the other hand, cement prices have increased by ~5% from their lows in July 22, mainly due to input cost pressure. With stability in commodity prices, road contractors anticipate some improvement in profitability and margins in FY24.
Despite sluggishness in project awarding till Aug’23, there is a robust pipeline of tenders in place. Entities boasting substantial order backlogs, strong financial standings, and engagement across various sectors are well positioned to capitalize on NHAI’s proactive approach to project allocation in FY24. Motilal Oswal’s top pick in this sector is KNR Constructions Ltd
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