Over the last 18 months, revival in the infrastructure sector was mainly linked to the development of roadways.
But, suddenly, there’s good news in the water segment, too, which augurs well for not only the construction sector, but also pipe manufacturers that saw challenging times due to a dearth of orders.
A report by Emkay Global Financial Services, which compiles monthly order inflows in infrastructure, says that the value of government tenders issued in the water supply sector has jumped 445% from a year ago. This indeed was on a low base. But it shot past the growth rate in roads, where orders grew 23% year-on-year. It compared well with railways and irrigation, where there was a contraction. Even in absolute terms, water supply projects worth ₹ 18,301 crore were issued, which was far ahead of the other segments.
What has spurred this sudden ordering out? Surprisingly, most of the water supply orders came from the newly formed Telangana state, which wanted to get to business after the long-drawn inertia in economic activity due to political rumblings. Further, the government seems committed to reviving stalled irrigation projects, which were tendered out in the old state of Andhra Pradesh. About two-thirds of these fall under the Telangana state, with tremendous cost-overruns, delays and non-completion that also affected some infrastructure firms’ profitability.
Fresh orders in water supply is good news for companies such as Larsen and Toubro Ltd and some mid-sized firms such as NCC Ltd, India Hume Pipe Ltd and Srikalahasthi Pipes Ltd, which will gain from pipe supplies. And, of course, the work on the roads would continue. There are now glimmerings of hope in the infrastructure sector.