Crisil Ratings has said that strong order execution will swell the revenue of road engineering, procurement and construction (EPC) companies by 15 per cent this fiscal (FY22), compared to 5 per cent in the pandemic-marred last fiscal. However, it said operating profitability will moderate by 100-150 basis points on-year due to surging raw material prices and increasing competition.
Even so, credit profiles of these players will remain stable, it said, citing that the trend will be supported by their healthy order books, well-managed balance sheets, prudent working capital management, and steady cash accruals.
Anuj Sethi, Senior Director, Crisil Ratings, said with fewer restrictions on construction activities during the second wave of the pandemic, road project execution was not impacted as severely as during the first wave. This has manifested in healthy revenue growth of 37 per cent on-year in the first half of this fiscal, albeit on a significantly weak base of last fiscal.
