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Axis Securities Report
For road construction companies under our coverage, we expect revenue growth of 10% YoY, Ebitda to be flattish, and adjusted profit after tax to de-grow by 2% YoY during the quarter.
Higher costs of a commodity such as steel, cement, aggregates, and diesel are expected to contract companies' Ebitda margin by 150-200 basis points YoY.
In the road construction space, Q1and Q2 is normally a soft quarter in terms of project bidding and awarding and awarding activity normally accelerates in Q3 and Q4.
Keeping this view in mind, for companies under our coverage, project awarding was muted during the quarter. Since most of the companies have robust order books with revenue visibility ranging between two-three years, we expect execution to remain robust moving forward. Softening in commodity prices is expected to provide solace from further contraction in margins moving forward.
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