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Axis Securities Report
We anticipate the pace of project awarding to gain momentum in FY25, as the shortfall in projects awarded in FY24 is expected to be compensated for.
A robust pipeline of tenders is in place, which is projected to accelerate National Highway Authority of India's awarding pace. Many road projects under the central government's flagship program ‘Bharatmala Pariyojana' for building highways and expressways are expected to gain momentum, leading to further improvement in road construction pace.
Additionally, higher budgetary allocation for roads in the Interim Union Budget – 2024-25 will support the construction of more highways and expressways.
Moreover, the National Infrastructure Pipeline, aimed at developing the overall infrastructure of the country, will also support road construction moving forward.
Since the majority of these projects will be awarded under engineering, procurement and construction and hybrid annuity model models, road construction companies will be the major beneficiaries of the government's infrastructure spending.
The road ministry is also looking to award many projects under the built-operate-transfer mode to reduce NHAI's debt burden.
With a robust and diversified order book, a healthy bidding pipeline, and softening commodity prices, we maintain a positive outlook on the sector.
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