Business News/ Industry / Infrastructure/  NHAI awards 6,003 km of highway projects in FY23: report

The infra project awarding activity picked up and gathered pace in Q4 of FY23, with NHAI awarding total projects of 6,003 km in FY23, much below its FY23 target of 6,500 km, Motilal Oswal Financial Services said in a report. 

According to the report, the total total value of projects awarded by NHAI was 1.26 trillion in FY23, down 15% YoY. 

Highway developer NHAI’s highway construction pace increased 13% YoY to 4,882km in FY23. 

Out of which AP (Andhra Pradesh) received the highest number of projects (32) and made up 16% of the total value of projects awarded. 

Five states, namely AP, Bihar, UP, Jharkhand, and Telangana, made up 54% of the total value of projects awarded in FY23, the brokerage report said. 

The infra sector will remain in focus due to consistent efforts of asset monetization and softening of the input prices which will improve the margins of many infra players in FY24, Motilal Oswal said. 

According to the report, the increased budget allocation for roads (+25% YoY) in the Union Budget of FY24 raises expectations for improved awarding in the future. 

The central government intends to accelerate the construction of roads in FY24 by 15-20% with a healthy pipeline of projects and an increase in the capital expenditure outlay. 

HAM projects continued to dominate project awarding in terms of the length of projects awarded (3,351km in FY23 v/s 3,493km in FY22) and the value of projects awarded ( 855b in FY23 v/s 1t in FY22). 

In terms of the number of projects, a total of 116 projects were awarded under the EPC mode in FY23, followed by 96 projects under the HAM mode. 

In recent years, there has been intense competition for EPC projects, due to relaxation of pre-qualification criteria following the Covid-19 pandemic. This led to heightened competition for HAM projects as well. This trend is evident from the growing number of bidders for HAM projects. 

The report further said that asset monetisation gathered pace in FY24, with NHAI Infra Investment Trust (NHAI InVIT) targeting to raise 75-80b in the third round of asset monetization. 

In the previous two rounds, NHAI InVIT successfully raised 94.3b in total during FY22 and FY23. 

Furthermore, NHAI InvIT raised an additional 15b through the issuance of non- convertible debentures (NCDs) in Oct’22. 

In FY24, NHAI intends to monetize 1,987km of highways and has identified 30 national highway sections as part of its plan. 

NHAI plans to monetize 1,987 km of highways through ToT/InvIT/toll securitization modes in FY24 and has identified 30 national highway sections for the same. 

In FY23, NHAI targeted to monetize 14 highway sections covering 1,750 km and realized INR 104b from the 487.7 km of road assets it managed to monetize. 

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Updated: 16 May 2023, 09:56 PM IST
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