NHAI road project awards surge in August (YoY), but funding concerns weigh on sector outlook: Nuvama

The NHAI awarded eight projects spanning around 95 km in August 2026, up 621 per cent year-on-year, compared with 13 km awarded in August 2025. However, awards declined from 127 km in July. Cumulatively, NHAI awarded around 329 km in FY27 so far, up 69 per cent year-on-year.

Nuvama said the increase in August awards needs to be seen against a backdrop of subdued awarding activity in recent years. The authority awarded 3,124 km in FY26, against 4,008 km in FY25, and missed its full-year target of around 4,500 km.

At the same time, road construction fell 12 per cent year-on-year and 21 per cent month-on-month to 182 km in August. Construction during the first four months of FY27 stood at around 1,053 km, down 24 per cent from the year-ago period.

Nuvama noted that media reports indicate NHAI plans to award 5,200 km of road projects in FY27, up 66 per cent year-on-year, while construction is targeted at 4,950 km, down 7 per cent.

However, the brokerage remained cautious about whether awarding activity can sustain a meaningful recovery. It pointed to the absence of an increase in NHAI's budgeted outlay for FY27 and said this "accentuates concerns around road awards".

The report also noted that the broader road sector's FY27 budget allocation increased 8 per cent to Rs 2.94 lakh crore after remaining broadly flat for two years. However, NHAI's own budgetary support remained unchanged at Rs 1.87 lakh crore, while its projected internal and extra-budgetary resources remained nil.

Nuvama said the government appears cautious about increasing NHAI's debt, with the authority likely to rely more on asset monetisation through toll-operate-transfer and infrastructure investment trust routes.

The report further added that a recovery in road awards would depend on funding availability and improved project execution, while the current funding constraints keep the sector outlook challenging. (ANI)