Daijiworld Media Network – New Delhi
New Delhi, Mar 6: Infrastructure companies are increasingly diversifying their order books as ordering of road projects slows and competition intensifies, leading to rising margin pressures in the sector, according to a report by PhillipCapital.
The report noted that net order inflow in the third quarter of FY26 increased marginally by 2.8 per cent year-on-year and 15.4 per cent quarter-on-quarter to Rs 425 billion. When including L1 and newly secured contracts, the total order inflow during the quarter stood at Rs 694 billion.
However, road project ordering activity, particularly from the National Highways Authority of India, remained subdued during the third quarter of FY26.
According to the report, the authority awarded only 377 kilometres of road projects during the quarter and 712 kilometres during the first nine months of FY26. This is significantly lower than the average annual ordering of about 5,500 kilometres recorded between FY21 and FY23.
The report said the slowdown in road orders has prompted most Engineering, Procurement and Construction (EPC) players to adopt diversification strategies.
The National Highways Authority of India is planning to award 124 road projects covering 6,376 kilometres with an estimated project cost of Rs 3.45 trillion. These include 84 Hybrid Annuity Model (HAM) projects, 28 Engineering, Procurement and Construction (EPC) projects and 12 Build-Operate-Transfer (BOT) projects.
Of the total planned projects, those worth Rs 1.5 trillion have already received approvals. However, many of them have yet to move to the awarding stage due to repeated bid extensions caused by delays in securing clearances and land acquisition issues.
The report highlighted that aggressive bidding by EPC and HAM players, combined with lower project ordering by the National Highways Authority of India, remains a key concern for the road construction segment in the medium term.
In response, infrastructure companies that traditionally focused on road construction are now aiming to secure 30–40 per cent of their order books from non-road segments.
These firms are expanding into sectors such as mining, railways, metro projects, urban infrastructure, hydro projects, tunnelling, renewable energy including battery storage, data centres and transmission projects to maintain balanced portfolios.
PhillipCapital maintained a cautious short-term outlook for the sector, citing rising competition in road projects, margin pressures and execution challenges.
However, the report added that companies with relatively strong balance sheets are likely to be better positioned to navigate the current sector headwinds.