The much-awaited government infrastructure project award and execution recovery remain elusive, with multiple stakeholders highlighting no major change at the ground level. We hear of near vacuum in ordering/thrust in execution during an otherwise seasonally strong Jan-March quarter; even in relatively better sectors such as power T&D and roads, we notice lower-than-expected activity. Participants in the roads industry, who are the most sanguine about the next one year, highlight slippages in project awards given procedural delays at all levels (MoRTH/Ministry of Finance); competition remains high in BOT/EPC but bidding appears to be relatively more rational in EPC projects.
Order awards in power T&D from states have improved but working capital remains stretched amid high counterparty risk. Lastly, whilst we hear of the Government’s strong vision for waterways, ports and a clean Ganga, we also hear of ‘detailed planning’ but no major outstanding tenders. Against this backdrop, we expect most Indian E&C players (except roads) to disappoint on execution, requiring further downward revisions to our FY16 estimates; notably, this does not appear good for cement companies that are facing a rural slowdown whilst awaiting elusive infra-led volumes
