Andhra Pradesh bagged the highest number of 32 highway projects and constituting 16% of the total value of projects awarded. Five states, namely AP, Bihar, Uttar Pradesh, Jharkhand and Telangana, made up 54% of the total value of highway projects awarded in FY23.
Telangana got 17 projects. The total value of the projects awarded to Andhra Pradesh is Rs 203 BN and it covered 845 km. The total value of projects awarded to Telangana is Rs 88 bn and it covered 380 km.
According to Motilal Oswal Financial Services, the infra project awards picked up pace in Q4 of FY23, with the NHAI awarding projects extending 6,003 km in FY23, much below its FY23 target of 6,500 km. The total value of projects awarded by NHAI is Rs 1.26 TN in FY23, down 15% YoY. NHAI’s highway construction pace increased by 13% YoY to 4,882 km in FY23.
The infra sector will remain in focus due to the consistent efforts of asset monetization and the softening of input prices which will improve the margins of many infra players in FY24.
Although order inflows have been relatively sluggish in FY23, the tender pipeline remains strong. The execution is expected to improve in 4QFY23.
Companies with substantial order books, solid financial positions, and involvement in multiple segments are well-positioned to take advantage of NHAI’s aggressive project awards in FY24. The top pick in this sector is KNR Constructions Ltd.
NHAI awarded 6,003 km of highway projects in FY23 (-5% YoY) compared to its target of 6,500 km. Total highway construction during FY23 was 4,882 km (+13% YoY). The value of projects awarded stood at Rs 1.26 TN in FY23 (-15% YoY).
The increased budget allocation for roads (+25% YoY) in the Union Budget of FY24 raises expectations for improved awards in future. The Centre intends to speed up the construction of roads in FY24 by 15-20% with a healthy number of projects and an increase in capital expenditure outlay.
NHAI’s primary focus is on asset monetization to raise funds outside budget resources. In FY24, NHAI Infra Investment Trust (NHAI InVIT) aims to raise Rs 75-80 BN in the third round of asset monetization.
In the previous two rounds, NHAI InVIT successfully raised Rs 94.3 BN in total during FY22 and FY23.
NHAI InvIT raised an additional Rs 15 BN through nonconvertible debentures (NCDs) in October 2022. In FY24, NHAI intends to monetize 1,987 km of highways and has identified 30 NH sections as part of its plan.
NHAI plans to monetize 1,987 km of highways through ToT/InvIT/toll securitization modes in FY24 and has identified 30 NH sections.
In FY23, NHAI targeted to monetize 14 highway sections covering 1,750 km and realized Rs 104 BN from the 487.7 km of road assets it managed to monetize. The government would also monetize assets through Toll Operate and Transfer (ToT) and InVIT routes.
