Back On The Road Again

The government is accelerating road projects when most players have buckled under the pressure of excessive leverage. Should you bet on the last men standing?  

Soumik Kar

Once bitten, twice shy. That’s the story of most companies in the roads space, which are struggling due to excessive financial leverage and issues such as stalled projects, cost overruns and pending clearances. In fact, many players in the road sector, such as IVRCL, HCC, Gammon, Reliance Infra, GMR Infra and others, have chosen to exit the segment completely or are selling existing road assets. But while the sellers are still lined up, steps to speed up execution and intent of increased spending have reignited investor interest. The government has said that it will spend close to Rs.1.03 lakh crore on roads in FY17, 49% more than last year. It aims to build about 50,000 km of roads over the next five years and has laid down a 10,000-km target for FY17.