Capital Expenditure On Road And Renewables Sector Expected To Increase By 35% In FY24 And FY25: CRISIL

The ratings agency credited conducive policies, increasing interest in investors, and strong execution speed to the estimated growth in capex in the sectors.

The capital expenditure for roads and renewables is expected to increase in the current and next fiscal year, a report by Crisil Ratings revealed on Tuesday. The report stated that the total capital outlay for roads and renewable energy sector in 2023-24 and 2024-25 is projected to increase to Rs 13 lakh crore, up by 35 per cent in comparison to the previous two fiscal years.

According to a PTI report, the ratings agency credited conducive policies, increasing interest in investors, and strong execution speed to the estimated growth in capex in the sectors. The agency further noted that the speed of road construction is expected to grow by 25 per cent in the ongoing and next fiscal, while capacity addition in renewables is projected to grow by 33 per cent in the same period. The sectors are estimated to sustain capex growth over the medium term, the agency said. 

Crisil Ratings’ managing director, Gurpreet Chhatwal, noted that the speed of execution of renewable energy projects is expected to grow by 33 per cent to 20 GW per annum in the current and next financial year, against 15 GW per annum in the last two fiscal years. This growth will be facilitated by an executable pipeline of 50 GW of projects, as of March 2023, the report noted. 

Crisil stated that road construction is expected to improve by 25 per cent to 12,500-13,000 km annually during the ongoing and next fiscal year, on account of robust projects and step-up in execution. Chhatwal added that a major factor to keep a watch on is the levels at which companies are lining up and bidding for projects. 

Crisil’s Senior Director, Manish Gupta, added that aggressive bidding has been witnessed over the last two years, without challenges on the implementation side. He noted that investor interest has been on the upwards trend, with Rs 75,000-80,000 crore raised through equity and asset monetisation in the last two fiscal years in both the sectors. The agency noted that keeping a consistent focus on asset monetisation and equity raising will help in maintaining a balance capital structure in both the sectors.