Road developers' debt to spike, revenue growth to remain high: Report
Sizeable equity commitments in under-construction projects and rising working capital needs will increase the debt burden of road developers but revenue growth is set to remain high, driven by strong contract awards and execution in the next fiscal, according to a report.
Besides, a high budgetary allocation to the sector will also help road developers, it added.
With the prevailing low leverage levels, developers have the headroom to borrow more to fund new projects, which will keep their credit risk profiles stable, said a Crisil report, which also notes that asset monetisation will be crucial to rein in debt.
The report is based on the analysis of 18 engineering, procurement and construction (EPC) players, constituting 70 per cent of the sectoral revenue.
According to Mohit Makhija, a senior director at the agency, total equity commitment towards the under-construction public-private partnership (PPP) projects is estimated at over Rs 21,000 crore by fiscal 2025.
The working cap