January 2015 Update On Construction & Infrastructure Sector – Emkay Global Financial Services Ltd


January 2015 Update On Construction & Infrastructure Sector - Emkay Global Financial Services Ltd

In the current month’s update on the infrastructure sector, we have assessed trends in project tenders, project awarding, port data, etc.

Key trends observed during the month

■ Total value of tenders issued in Dec2014 stood at Rs439.2 bn (-29.1% YoY) led by weak tendering from the water segment (-90% YoY), irrigation segment (-48% YoY), community services (hospitals, institutional buildings) and real estate segment. We also witnessed decline in total number of tenders. However total value of tenders issued in YTDFY15 stood at Rs3071 bn (-4.5% YoY)

■ Total value of contracts awarded in Dec2014 stood at Rs184bn (-19.7% YoY) led by lower awarding in roadways (-66.6% YoY), Railways (-49% YoY), power equipment

■ (-46.8%).However total value of contracts awarded in YTDFY15 stood at Rs1923 bn

■ (-5.3% YoY)

■ We witness that over the last 9 months awarding activity has picked from NHAI level and has awarded projects amounting to Rs103 bn/ 1755 km. The NHAI awarded EPC contracts worth Rs47bn/1049 km and awarded BOT contracts worth Rs55.8 bn/706 km.

■ According to press release released by MORTH (Ministry of road & transport) road length of 3419 km has been awarded till October 2014 achieved 40% of the annual awarding target of 8500 km.

■ As far as the competitive intensity is concerned in the EPC projects barring 9 projects we saw aggressive bidding in 3 projects where the bidding cost remained 14-24% lower than the benchmark cost

■ Major Indian Ports handled 49.3 MMT in Dec2014, showing a modest growth of 2.9% YoY and 1.5% MoM in port traffic. YoY growth was driven by the others category (+16.9% YoY) and Coal (+8.8% YoY) while Iron Ore (-33% YoY) and Fertilizer (-22.6% YoY) witnessed a sharp decline

■ On YTD basis Container traffic on the West Coast grew to 6.44 mn TEUs (+13.3% YoY) in YTDFY15. Mundra port (+19.8% YoY, 32.3% share of total), Pipavav port (+21.8% YoY, 9.9% share of total) & JNPT (+10.3% YoY, 49.7% share of total) were the major growth drivers.
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