Infrastructure stocks have been under pressure this week as the street fears that projects, including the Mumbai-Ahmedabad high-speed rail project, are at a risk of getting stalled with the new government in Maharashtra. Manoj Tulsian, whole-time director and CFO, JMC Projects, and Sameer Bhatia, president at CRISIL Infrastructure Advisory, about the sector in an interview with CNBC-TV18.
Tulsian said it’s too early to comment on possible stalling of projects due to change in state government.
“We are already working on Mumbai-Ahmedabad high-speed rail project and many other companies are working on the same. So maybe after a due course of time we will come to know whether this will have any effect or not,” he added.
On orderbook in the sector, Tulsian said: “In the space where we operate, we have seen close to around $8-9 billion of fresh orders come in the last 7-8 months and the bid pipeline looks to be good. In fact, looking at some of the numbers between highways, water irrigation, and road, we still see close to $10-15 billion of more orders in the pipeline in the next 6-9 months. Therefore, I don’t think orderbook per se would be a challenge.
“However, bank financing is one area where things have become more reactive than proactive and because of which many of the companies might be facing that as a challenge,” added Tulsian.
On business front, he said: “In the first half of the year we have done around 27-28 percent because of the low base effect in the first half of the previous year because the orders which we got picked up the momentum from Q3 last year. So our number started changing big way from Q3 of last year.
“Therefore, keeping that in mind Q3 and Q4 may not grow at 28-30 percent as the base effect comes into picture and that’s why for the full year we have given a guidance of 20 percent.”
According to Bhatia, long-term outlook for infrastructure looks positive.
“The government has announced that it will be spending about Rs 100 lakh crore over the next five years. Our report, which we released at CRISIL Infrastructure Conclave which is a CRISIL Infrastructure year book, has talked about Rs 235 lakh crore to be spent over the next 10 years to beat India’s infrastructure need,” said Bhatia.
On slowdown in government orders, Bhatia said: “The minister at our conclave was very honest about the whole thing that the government is actually short of funds at this point of time and they will not be able to take up the lion's share which they have been doing over the last 3-4 years of the investments, so private capital has to buildup.
“What are the avenues for the government to get more money this year when the demand is down and that’s why the GST and other tax revenues are actually down. So they have to go for asset monetization and disinvestment. I think these are the two levers that they have which can create some headroom for themselves to have money which they can lease out to the infrastructure sector,” added Bhatia.