In Q3 FY’15: ICRA, Construction sector sentiment may improve
According to a report, in the third quarter of the current fiscal, Investment cycle in the construction sector is likely to improve if a stable government comes to power at the Centre after the general elections.
Credit rating agency ICRABSE mentioned in its report that until September, though there were expectations of facing execution challenges but the revenue growth of construction companies could persist to remain muted on the back of poor performance of companies in the infrastructure sector.
Investment Information Credit Rating Agency Ltd. (ICRA) said, in the first half of the fiscal we expect that the revenue pressure would continue later on improvement in the investment cycle could be closely linked to the election outcome and perceived strength of a new government.
The rating agency added that some companies are not able to achieve their set business targets, some of them are sectors like roads, airports and power.
It mentioned that the construction sector is been in tight spot due to following factors such as high land acquisition cost, fuel supply shortages, precarious financial health of distribution utilities, tariff-related impediments for port sector, Inordinate delays in environmental clearances and dwindling interest from private players.
The report explained that “In fact, companies in the construction and infrastructure sectors form the highest proportion of CDR cases approved in FY13 and first half of FY14.”
NHAI was able to reward just 15 per cent of its targeted 7,500 km amid dwindling interest by private players along with increasing difficulties in getting financial closure ; delays in environmental clearances, relatively less remunerative stretches in the offering and land acquisition
Source: Economic Times
Airports, construction sector, Distribution utilities, environmental clearances, Fuel supply shortages, general elections, Government, ICRA, ICRABSE, infrastructure sector, Investment cycle, Land acquisition cost, NHAI, Power, Precarious financial health, Roads
