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The number of construction tenders witnessed a 96% year-over-year increase in the fourth quarter of FY24, totaling ₹7,089 billion, according to India Ratings and Research (Ind-Ra). This increase is defined by increased tendering activity—dubbed a "March Rush"—driven by the central and state governments. On the other hand, the amount of orders placed decreased by 30% to ₹1,623 billion, which represents the worst growth rate in the previous eight quarters.
The roadssector led with a 49% share of the total tenders floated in the quarter, up from 33% in the previous year. This was followed by real estate and water segments, contributing 20% and 16% respectively. On the other hand, the power sector, which includes generation and distribution, made up 40% of the total orders awarded, while roads accounted for 31%.
Krishan Binani, Director of Corporate Ratings, Ind-Ra, commented on the future of the sector, stating, "Tender awards could see significant upward momentum from June 2024 and in line with historical announcements starting 2QFY25." This suggests an expectation for an increase in contract awards in the near future.
The power segment, with two large value orders, constituted 45% of the awarded order book, highlighting its dominance in the quarter's activity. Other sectors such as railways, irrigation & sewage, and mining also showed varying degrees of activity in both tendering and order awards.
Despite the dip in order awards, Ind-Ra has maintained a neutral outlook on the construction sector for FY25, expecting EPC sector revenues to grow by 10%-12% driven by continued government capital expenditure and a likely rebound in state and private spending. However, growth in the center's own capex is projected at 17%, in line with a trend of reduced spending in election years, which may be offset by sector-specific private capex and state expenditure.
Also Read : Railway Minister unveils 'Indian Railways Construction Manual 2023' UP govt approved ₹16k cr rapid rail route to connect Delhi & Noida airports
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