India Ratings and Research (Ind-Ra) has published the FY21 edition of its Project Tracker, which captures the segment-wise and state-wise execution profile of the engineering, procurement and construction (EPC) companies in the short-medium term, basis the tenders floated and orders awarded across various segments and states.

The amount of tenders floated (above INR2.5 billion) across all divisions in the construction space rose 38% yoy to INR7,985 billion in FY21, signifying the impetus shown by the central and state governments towards the sector. 

As per data from Projects Today, the roads, irrigation and other real estate segments (including hospitals, hotels etc) on a combined basis contributed around 81% to the overall tenders floated. 
 

Figure 1: Sector-wise Tenders Announced on yearly basis

 

FY21

FY20

FY19

FY18

FY17

FY16

Contribution to the total tenders announced

Roads (%)

39

32

37

52

45

42

Railways (%)

7

12

8

8

9

10

Irrigation & sewage (%)

25

24

22

16

15

18

Power (%)

3

6

7

3

13

8

Ports & airports (%)

2

1

2

2

4

3

Other industrial (%)

0

0

0

0

0

2

Buildings (%)

17

23

23

18

13

14

Mining (%)

7

1

1

0

1

3

Overall tenders (INR billion)

7,985

5,798

7,539

8,456

7,279

5,870

Sources: Projects Today, Ind-Ra


In FY21, the tenders floated had seen incremental growth, majorly contributed by Uttar Pradesh at INR1,225 billion (FY20: INR381 billion). The tenders announced from UP contributed 15% to the overall tenders floated across the country in FY21. The orders floated are majorly from Bharatmala Expressway projects and Swachh Bharat Mission schemes. UP was followed by Telangana and Andhra Pradesh; both put together contributed around 16% to the overall tenders floated in FY21. 

The orders awarded grew 72% yoy in FY21 to INR3,183 billion, with the road segment contributing to the major chunk of the orders awarded at 27% (FY20: 25%). This was followed by mining at 23% and railways (including metros) at 21%. 

Out of the overall order awards in FY21, 70% of the orders were contributed by roadways (27%), mining (23%) and railways (21%). 

 

Figure 2: Sector-wise Awards Announced

 

FY21

FY20

FY19

FY18

FY17

FY16

Contribution to the total tenders awarded

Roads (%)

27

25

40

42

29

28

Railways (%)

21

13

6

6

21

16

Irrigation & sewage (%)

10

14

12

10

8

7

Power (%)

5

21

12

20

21

34

Ports & airports (%)

1

0

5

1

1

1

Other industrial (%)

6

5

8

6

7

7

Buildings (%)

8

19

15

14

10

8

Mining (%)

23

3

1

0

1

0

Overall orders awarded (INR billion)

3,183

1,846

3,165

2,581

1,925

2,090

Sources: Projects Today, Ind-Ra


While the sector-wise awards increased in roads as well as mining segments, the competitiveness also increased. In FY21, 58% and 69% of the overall tenders awarded in the road and mining segments, respectively had seen a participation from more than five bidders. 

Ind-Ra believes that the incremental order inflows in roads, railways, irrigation, housing development projects and distribution segments would drive the demand forecast for the sector in FY22. The schemes such as Bharatmala, commissioning of Dedicated Freight Corridors, Swachh Bharat mission & Jal Jeevan mission and Affordable Housing Schemes coupled with the National Infrastructure Pipeline would drive the sector order inflows in the medium term. However, continued competitiveness in these segments is likely to result in a moderation of operating margins of EPC players. 

Ind-Ra in its FY22 construction outlook has
revised the sector outlook to improving from negative, based on the rich budgetary allocations which would result in huge order inflows coupled with better execution rates.

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Analyst Names

  • Harsha Rekapalli

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    Monil Furia

    Analyst
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    Director
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