Infrastructure companies have started showing signs of financial revival : ICRA

Though many infrastructure players are struggling with their highly leveraged balance sheets, still for others there’s improvement in financial profile of infrastructure companies, says latest ICRA report.

However, revival of infrastructure sector is still in the early stages.

Those companies with exposure to the airport and the highway sectors have started witnessing an improvement in their operational and financial performance, thereby, improving their standing. The improved balance sheet, an improvement in operational performance will certainly help in improving credit metrics of these companies.

ICRA had done a sample study of infrastructure companies across segments. The outcome of the study was that the aggregate debt at a standalone level as of March 2017 had increased only marginally from March 2016, while at the consolidated level there was a 12% year-on-year decline in debt from Rs 1.58 lakh crores to Rs 1.39 lakh crores. This dip is primarily due to divestment of stake in subsidiaries or projects.

Thanks to government’s focus area on roads and urban infrastructure, particularly engineering, procurements and construction based contracts, it has helped construction companies improve their order book position. Currently, the order book position of most construction companies stands at over three times their last reported annual revenues.

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