The recent victory of the NJP-led Mahayuti alliance in Maharashtra has led to a surge in the infrastructure sector. Investors are optimistic about policy continuity and expect a boost in capital expenditure.
Analysts predict a strong recovery in the latter half of the fiscal year for engineering, procurement, and construction (EPC) firms. This is good news for companies like J Kumar Infraprojects and L&T, as they saw significant gains after the recent victory. Other companies such as Ashoka Buildcon, IRB Infrastructure Developer, Afcons Infrastructure, and GR Infra also recorded gains, contributing to an increase in the BSE India Infrastructure Index.
Before the elections, the Maharashtra government initiated several infrastructure projects and awarded contracts to the lowest bidders. Concerns were raised about potential delays if a new government came into power. However, the incumbent government's victory has alleviated these worries, and project awards are expected to proceed without further delays. Over the first seven months of the current financial year, the government awarded projects worth Rs 1.5 lakh crore across various sectors.
Key players in the Maharashtra infrastructure landscape include L&T, HG Infra, J Kumar Infra, Ashoka Buildcon, and GR Infra. These companies have been awarded significant contracts by the state government, reflecting their strong presence in the region. For example, GR Infra secured projects worth Rs 5,300 crore, while J Kumar Infraprojects received orders totaling Rs 6,000 crore. Other major awards include Rs 4,100 crore for HG Infra, approximately Rs 4,000 crore for Ashoka Buildcon, Rs 3,800 crore for Welspun Enterprises, and Rs 3,500 crore for Afcons Infrastructure.
The recent project awards have a significant impact on companies like HG Infra and GR Infra, as the new contracts make up a substantial portion of their order books. For example, two recent projects from the Maharashtra State Road Development Corporation account for 25 percent of HG Infra's total order book of Rs 16,000 crore. Similarly, GR Infra's newly won projects in Maharashtra comprise around 25 percent of its Rs 20,000 crore order book. Ashoka Buildcon also has a significant stake in Maharashtra, with over 20 percent of its order book tied to projects in the state. J Kumar Infraprojects relies heavily on projects in Maharashtra, with approximately 64 percent of its total order book coming from the state.
The positive sentiment in the infrastructure sector is supported by the government's proactive approach to project tenders and awards. With a clear mandate from the electorate, the government is expected to continue momentum in infrastructure development, which is crucial for economic growth and job creation. As the capex cycle gains traction, investors are likely to continue betting on the infrastructure theme. The outlook for the infrastructure sector in Maharashtra remains optimistic, with the recent electoral results paving the way for sustained investment and development. The focus will be on efficiently executing awarded projects to ensure the benefits are realized across the state.