Construction Firms See 69% Jump in Orders in FY18

Madan Sabnavis, chief economist with CARE Ratings said that most of the order wins were driven by government spends in sectors such as urban development, roads, and railways. The biggest order win by value in 2017-18 was by state-owned power utilities. In October, Bharat Heavy Electricals (BHEL) reported an order win of Rs 204 billion for a power project for Telangana State Power Generation Corporation. In 2015-16, companies had reported orders worth Rs 1.94 trillion, according to the data of the Business Standard Research Bureau. A rise in the order flow, industry analysts and experts say, is not a norm in terms of growth but reflects improvement over the poor performance in 2016-17. The order flow of listed capital goods and construction companies was worth more than Rs 2.80 trillion in 2017-18 — a rise of 69% over the Rs 1.65 trillion in the previous financial year. In 2016-17, L&T said it was at Rs 1,430 billion. In its revised guidance, the company said it expected growth to remain muted. For others like BHEL, there have been efforts to diversify its order book portfolio. Analysts with IIFL in their February 22 research note said that the transportation is gaining traction (Rs 22 billion order inflows in the nine-month period of FY18) with Indian Railways’ focus on modernisation and it will also undertake rail electrification EPC. It targets metro orders with technology collaboration with Kawasaki (including the Ahmedabad-Mumbai bullet train). The company is aggressively pursuing growth in transportation, transmission and distribution, solar, water and defence space and targets 50 per cent non-coal sales mix (30 per cent at present) over the medium term. M S Unnikrishnan, chief executive officer and managing director, Thermax, said the growth rate was owing to a mix of government spends and private capex, adding that “There are sectors where there are no government orders and others where there are only government orders. Sixty-nine per cent would be an overhang of large companies getting bigger orders, where the base effect was lower last year. Fertilizers, oil and gas, and roads and bridges have seen orders.”