Deal Activity in India May: Infrastructure deal activity surges in May

Infrastructure transaction activity in India surged in the month of May, while announced new investments rose 38.3% year-on-year, data showed.

May saw a flurry of deal flows and investments in the renewable and new energy and mobility segments, while logistics saw significant fundraising, according to a report by research firm Nomura.

In May, Greaves Electric Mobility, the arm of Greaves Cotton, bagged investments of up to US$220 million from a Saudi investor, Abdul Lateef Jamil, while UAE-based IHC will invest a total of Rs.154 billion

& and for the development of 45 GW of renewable energy and infrastructure.

Royal Dutch Shell has agreed to purchase Sprng Energy, acquiring a 72% stake in Numocity for EV charging in India, while Delhivery has raised Rs 23.66 billion in a funding round from anchor investors.

Tata Projects will develop Phase I of the Noida (Jewar) International Greenfield Airport Project on an EPC basis at an estimated cost of Rs 45.88 billion.

new investments increase

New investment announced in May rose 38.3% yoy to Rs.1,384.6 crore (up 8.5% mom). This was primarily due to an increase in irrigation, production and water acreage, partially offset by a decrease in power and power distribution acreage, according to Dolat Capital.

Among new investments, manufacturing had a large share with a share of 31.7%, while roads and real estate accounted for 17.2% and 12.4%, respectively.

In terms of roads and highways, the Department of Roads and Highways (MORTH) awarded tenders for the construction of 295 km of National Highways in May, compared to 352 km in May 2021 and 487 km in May 2020.

NHAI’s long-term tendering activities increased from 2,222 km in FY19 to 4,788 km in FY21 to 6,306 km in FY22. NHAI’s capital spending has reached an all-time high of Rs 1,68,770 crore, according to ICICI Direct.

“Big players have remained conservative in the bidding phase and have seen modest new orders recently as bidding norms have been relaxed since H2FY21, resulting in more intense competition. With expectations of NHAI returning to normal bidding norms and continued strength in awarding promotions, organized developers are likely to see healthy inflows,” the firm said.

Companies are also braced for rising commodity prices. Steel prices rose 2.4% qoq in Q1FY23 while cement prices surged to highs. The increase in commodity prices had an impact on margin developments in FY22, but only marginally as they were protected by built-in escalation clauses in most of NHAI’s projects.

“Margins are expected to normalize going forward as prices for key commodities such as steel and cement soften,” ICICI Direct said.

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