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India's road awarding projects are set to gain strong momentum in FY25, with a significant increase expected in the number of projects being awarded, highlighted a report by Axis Securities.
The report also noted that as of September 2024, there is a robust bidding pipeline worth Rs 1.1 trillion, driven primarily by two major types of projects: hybrid annuity model (HAM) and engineering, procurement, and construction (EPC) projects. It highlighted that the HAM projects make up 47 per cent of the total pipeline, while EPC projects account for around 36 per cent. These two models are expected to remain dominant in project awards in the coming year, with a potential increase in the share of build-operate-transfer (BOT)-Toll projects as well. "The road awarding pace is set to accelerate, with a bidding pipeline of Rs 1.1 Tn (as of September 2024), largely driven by HAM projects" the report said. The acceleration in project awards in FY25 is largely due to a shortfall in awarded projects during FY24. This delay will likely be compensated by the surge in activity during the next fiscal year. The National Highways Authority of India (NHAI) has already established a strong pipeline of tenders, which is expected to support the increased pace of project awards in FY25. Earlier, the Ministry of Road Transport and Highways (MoRTH) has introduced a new policy to further streamline the bidding process. Under this policy, even if a highway project receives only one bid, the project will not be automatically cancelled, as long as the bid is deemed reasonable. This move is aimed at ensuring that project awards are not delayed due to limited competition in the bidding process. Despite the positive outlook for FY25, any potential slowdown in project awards could impact the growth momentum of road developers in FY26. However, the sector is currently well-positioned to overcome such challenges, with a diversified order book and a strong bidding pipeline that offers stability and growth opportunities for the near future. (ANI)
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