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India's Road Builders Pivot as NHAI Orders Slow, Diversify to New Sectors

Infrastructure companies in India are actively diversifying their order books away from roads due to a significant slowdown in project awards from the National Highways Authority of India (NHAI). NHAI awarded only 712 kilometres of road projects in the first nine months of FY26, a sharp drop from the annual average of 5,500 kilometres between FY21 and FY23. In response, firms are targeting sectors like mining, railways, metro systems, and renewable energy to make 30-40% of their orders non-road. While PhillipCapital maintains a cautious short-term outlook due to intense competition and execution challenges, companies with strong balance sheets are seen as better positioned to weather the sector's headwinds.

Key Points: Infrastructure Firms Diversify Amid NHAI Road Order Slowdown

  • NHAI road awards plummet to 712km in 9M FY26
  • Firms target 30-40% orders from non-road segments
  • Aggressive bidding and margin pressures key concerns
  • Diversification into mining, railways, metros, and renewables
2 min read

Infra companies diversifying to other segments as NHAI road orders remain subdued: Report

Report: Indian infra companies shift to mining, railways, and renewables as NHAI road awards drop sharply, intensifying competition and margin pressure.

"Significant slowdown in road orders, diversification remains key... Most EPC players are following the strategy of diversifying - PhillipCapital Report"

New Delhi, March 6

Infrastructure companies are increasingly diversifying their order books amid a slowdown in road project ordering, with competition intensifying and margin pressures rising in the sector, according to a report by PhillipCapital.

The report highlighted that net order inflow in the third quarter of FY26 rose marginally by 2.8 per cent year-on-year and 15.4 per cent quarter-on-quarter to Rs 425 billion. Including L1 and new orders, the total order inflow during the quarter stood at Rs 694 billion. However, road ordering activity, particularly from the National Highways Authority of India (NHAI), has remained subdued in the third quarter of FY26.

It stated, "Significant slowdown in road orders, diversification remains key... Most EPC players are following the strategy of diversifying".

The report noted that NHAI awarded only 377 kilometres of road projects during the quarter and 712 kilometres in the first nine months of FY26. This is significantly lower compared to the average annual ordering of around 5,500 kilometres recorded between FY21 and FY23.

The report added that NHAI has plans to award 124 road projects covering 6,376 kilometres with an estimated project cost of Rs 3.45 trillion. These include 84 Hybrid Annuity Model (HAM) projects, 28 Engineering, Procurement and Construction (EPC) projects and 12 Build-Operate-Transfer (BOT) projects.

Out of the total planned projects, those worth Rs 1.5 trillion have already been approved. However, these projects have not moved to the awarding stage due to repeated bid extensions caused by delays in securing necessary approvals and issues related to land acquisition.

PhillipCapital said that aggressive bidding by EPC and HAM players along with lower ordering by NHAI is a key concern for the road segment in the medium term.

In response to these challenges, infrastructure companies that were traditionally focused on road projects are now targeting 30-40 per cent of their order books from non-road segments.

The report noted that most EPC players are adopting a diversification strategy and expanding into sectors such as mining, railways, metro, urban infrastructure, hydro projects, tunnelling, renewable energy including battery storage, data centres and transmission projects to balance their portfolios.

PhillipCapital maintained a cautious outlook on the sector in the short term, citing rising competition in the road segment along with margin pressures and execution challenges.

However, the report added that companies with relatively strong balance sheets will be better positioned to withstand short-term sector headwinds.

- ANI

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Reader Comments

P
Priya S
The slowdown in NHAI orders is worrying. We need good roads for development. The report mentions land acquisition delays – this is a perennial issue that needs a permanent solution from the government.
R
Rohit P
Aggressive bidding leading to margin pressure is a real problem. Companies cut corners to win projects, and quality suffers. NHAI should have stricter criteria, not just go for the lowest bidder.
S
Sarah B
Interesting read. The pivot to data centers and battery storage shows these companies are looking at tech-driven infrastructure. That's a positive sign for India's modernization.
V
Vikram M
From 5500 km average ordering to just 712 km in 9 months? That's a massive drop. Hope the planned projects worth ₹3.45 lakh crore get moving soon. Our economy needs that infra push.
K
Karthik V
Good that companies are looking at railways and urban infra. Our cities desperately need better public transport and utilities. Maybe this diversification will speed up those projects.

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