Elections slow capex order inflows

by IANS |

New Delhi, Nov 21 (IANS) The busy elections season in the next six months is leading to a moderation in new capex activity, as per new projects data, and it is slowing order inflow momentum for large projects especially in capital goods, railways as well as the roads sectors, Elara Securities said in a report.

Management commentary from companies post Q2FY24 results corroborates the loss in pace in order awarding, the report said.

“Within our capital goods coverage, growth in inflows decelerated to 39 per cent in Q2FY24 from 62 per cent in Q1FY24 and 65 per cent in Q4FY23. Likewise, in the infrastructure space, for the companies under review, cumulative order inflow rose 49 per cent YoY in H1FY24. However, if we were to exclude L&T, which saw large international order inflows, aggregate order inflow declined 27 per cent YoY,” the report said.

Likewise, while the Ministry of Roads & Highways has spent 64 per cent of budgetary allocation up to October 2023, new project awarding activity has fallen 48 per cent YoY to 2,595 km, highlighting that focus has shifted toward completing existing projects.

With significant amount of spending lined up in rural India and the agriculture sector, such as likely hike in PM Kisan amount and higher MGNREGA allocation, as well taking into account the freebies announced in Assembly Elections of five states where voters will decide the next government (Rajasthan, Madhya Pradesh, Telangana, Chhattisgarh & Mizoram), focus is shifting to election preparedness and related spending, delaying the impetus toward new ordering activity by the government and wait-and-watch approach by the private sector, the report said.

“We expect further moderation in order inflows momentum, led by infrastructure spending in railways and metros, power T&D, renewables, wastewater treatment, and the civil sector,” the report said.

“However, one sector that may buck the trend is water sector. Since spending on schemes related to last-mile delivery, such as Nal Se Jal Scheme, which is under the Jal Shakti Ministry, helps in enhancing positive sentiments prior to elections, we expect spending in Jal Shakti to remain in the fast lane in the run-up to the elections, bucking the likely slowdown in other infra space."

Moreover, since the Jal Jeevan Mission is targeted to be completed by end-CY24, execution may remain healthy through FY25.

This fiscal too, the Jal Shakti Ministry has spent 21 per cent of BE April-September vs an average of 19.2 per cent during April-September FY21-23.

Latest News
Benchmark indices at record highs, markets in overbought condition Mon, Dec 04, 2023, 05:59 PM
New Telangana Assembly constituted, Gazette notification issued Mon, Dec 04, 2023, 05:55 PM
BJP in Haryana will make hat-trick in assembly polls: Khattar Mon, Dec 04, 2023, 05:51 PM
4% rise in crimes against women; 31,982 raped in 2022: NCRB Mon, Dec 04, 2023, 05:42 PM
Dalai Lama, global leaders to attend world Buddhism meet in Mumbai on Dec 16 Mon, Dec 04, 2023, 05:39 PM
Kamal Nath meets Chouhan, congratulates him for election victory Mon, Dec 04, 2023, 05:34 PM
Wild elephants trample two farmers to death in Odisha Mon, Dec 04, 2023, 04:59 PM
INS Sandhayak inducted into fleet on Navy Day Mon, Dec 04, 2023, 04:50 PM
BJP MLAs stage walkout from Bengal Assembly as CM enters Mon, Dec 04, 2023, 04:46 PM
20 turncoats get elected on Congress tickets in Telangana Mon, Dec 04, 2023, 04:39 PM
4 Indian-origin men sought in connection with aggravated assault in Canada Mon, Dec 04, 2023, 04:07 PM
New Zealand to make cash service easier in rural areas Mon, Dec 04, 2023, 04:03 PM
SolarWinds India appoints Abhijit Banerjee as Managing Director Mon, Dec 04, 2023, 04:03 PM
Calcutta HC shields BJP legislators from arrest in National Anthem insult case Mon, Dec 04, 2023, 04:02 PM
20 turncoats get elected on Congress tickets in Telangana Mon, Dec 04, 2023, 04:02 PM