 "Highway building rose during Apr-Dec 2015")
An overall negative outlook persists for India's infrastructure sector in the new financial year that begins in April, with multiple issues plaguing the growth of thermal power and toll roads sector even as ports, airports and the renewable energy sector are likely to perform well, according to India Ratings and Research.
The Fitch Group-owned research and ratings firm has said in its latest report "FY17 Outlook: Infrastructure and Project Finance" the negative outlook on toll roads and thermal power sectors and high loan exposure to these sectors continue to weigh down the overall sectoral outlook.
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“The infra sector continues to grapple with the high concentration of poorly performing assets resulting in not only fragile coverage metrics, but also lower than expected equity returns to the sponsors," the report noted.
In the toll roads sector, the negative outlook reflects the absence of a strong widespread traffic recovery, toll rates contraction and stressed sponsors' credit profile. "The sector's inflection point will continue to be consistent traffic which is elusive yet and also is a function of macroeconomic revival," the report states.
In the thermal power sector, the utilities continue to delay the call for long term offtake bids and continue to rely on short term buying to manage demand-supply mismatches. Despite policy interventions and improved fuel supply position, the tepid demand curtailed Plant Load Factors and many plants are operating at sub-optimal levels.
