In Q3FY21, we expect construction companies to return to topline growth driven by near optimum labour availability, pick-up in execution. For real estate companies, key highlight will be strong residential sales volumes growth led by factors like pent up demand, benign interest rates, measures like stamp duty cut in Maharashtra. However, financial numbers of real estate companies will look optically weak due to rental waiver in retail segment, sub-optimal hospitality portfolio, albeit QoQ growth will be robust.
Infrastructure: Mixed inflows trend; revenue growth to be back
A mixed trend was seen for order inflows across the construction universe. NCC was clearly the leader with order inflows worth Rs. 13643 crore during the quarter. PNC announced irrigation projects worth Rs. 952 crore during the quarter post Q2 results. While KNR announced no new order inflows in Q3, in January, it received EPC road projects worth Rs. 604 crore in Tamil Nadu. Ashoka Buildcon, on the other hand, has not announced any new orders during the quarter. On the execution front, we expect construction companies to see a marked improvement in Q3. Key factors driving the execution pick-up will be optimum labour availability and smoothening of raw material supply chain. Road players with aid from NHAI payment terms and existing project execution are likely to see relatively better topline growth. On an overall basis, we expect our road & construction universe to post revenue growth by 7.1% YoY to Rs. 5223 crore. KNR and PNC are likely to outperform with topline growth of ~11% and ~10% YoY, respectively. The EBITDA margin of our universe is expected to contract 60 bps YoY to 13.5% Overall, we expect our universe PAT to grow 8.6% YoY to Rs. 340.2 crore, largely driven by a robust topline performance.
For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_InfraRealEsate_Q3FY21.pdf