Renewables, roads, real estate to see ₹17.5 lakh crore investment by FY27: CRISIL
Mumbai: India's renewable energy, roads and real estate sectors are set to attract a combined investment of ₹17.5 lakh crore over the current and next financial year, up nearly 15 per cent annually from the ₹13.3 lakh crore invested in the previous two fiscals, according to CRISIL Ratings.
According to the official press release, the agency sees strong growth across all three sectors, despite evolving business models and operational risks.
'What remains constant across these three sectors is the strong investment growth. Over this fiscal and next, investments may rise at 15 per cent annually, reaching ₹17.5 lakh crore compared with ₹13.3 lakh crore in the preceding two fiscals,' said Krishan Sitaraman, chief ratings officer, Crisil Ratings.
The release added that of the 75 GW capacity to be added in this and next fiscal, hybrids will account for 37 per cent, which is a 'massive' jump, considering hybrids accounted for 14 per cent of the capacity additions over the preceding two fiscals.
In roads, which have a significant multiplier effect on the economy, a pick-up in project awarding will be important to revitalise the sector's growth. For the National Highways Authority of India (NHAI) to reach its previous highs of ~6,000 km per year of awards and execution, a substantial rise in private capital through acceleration in asset monetisation will be essential.
'We expect the share of monetisation in NHAI's sources of funds to grow to 18 per cent in this fiscal and next, compared with 14 per cent in the preceding two fiscals. What lends confidence here is a monetisable asset base worth ₹3.5 lakh crore to ₹4 lakh crore,' added the release.
In real estate, the residential segment is seeing demand normalise after rapid recovery seen following the pandemic. Revenue growth for developers is expected to remain steady at 10-12 per cent this fiscal and next.
'With volume growth slated to rationalise, realisations will be supported by continuing demand for premium projects. Commercial real estate, too, will see steady net leasing growth of 7-9 per cent this fiscal and next,' said CRISIL.
As India continues to remain a cost-efficient market for GCCs and domestic sectors grow at a steady pace, annual net leasing demand is poised to cross 50 million square feet by fiscal 2027, it added.
Manish Gupta, deputy chief ratings officer, Crisil Ratings, added that robust operating performance over the past few fiscals and the consequent strong cash flows, have kept debt levels under control.
'About ₹2.1 lakh crore of equity capital has been deployed in these three sectors over the past two fiscals driven by strong investor participation, supporting the credit profiles of developers and projects,' said Gupta.
CRISIL added that for renewables, while debt will grow given high capex intensity, resilient operating performance would result in stable net debt or Ebitda at about seven times over this fiscal and next.
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