NHAI to miss FY12 target - PINC Research

A tall job at hand

With only one month left to meet its targets of 7300km, NHAI is putting its act together to award the remaining ~3015km of road projects. Considering the awarded projects, current bid stage and execution, we believe NHAI will miss both its target of awarding and completion. Till date (FY12), NHAI has awarded ~4,285km of road projects worth Rs408.9bn. We believe it's difficult for NHAI to award ~7300km this fiscal, as current bid stage of projects suggest possibility of awarding ~1635km by end of March. Though NHAI may stretch and award ~2000-2200km, still it will fall short by ~800-1000km of awarding. The Cabinet Committee on Infrastructure yesterday had approved three projects worth Rs35bn spanning 332km and awarding of these projects will start from today. Though we have witnessed very competitive bidding throughout the last year, we believe competition would ease going forward, as already developers are facing challenges regarding financial closures and our channel check suggest ~40 projects are on the block. Our stance get further vindicated by looking at the recent bid of Kiratpur-Ner Chowk in Himachal Pradesh won by ILFS Transportation that witnessed only four bidder.

Completion marginally higher YoY, NHAI may miss the target

Recent sentiment dampeners like policy paralysis, difficulty in environment clearance, and achieving financial closure had impacted execution of projects. Total length completed has only increased by 8.6% YoY till Dec end, despite record awarding of projects last year. Till Dec'11 NHAI has completed 1,258km of roads and is likely to miss its target of 2,500km. However, we expect NHAI to complete ~2,110km in FY12 an 18.2% YoY growth.

Source : Equity Bulls

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