Muted capex inflows ahead of polls

New Delhi: 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.