COVID-19 likely to impact revenue growth of construction companies in near term: Ind-Ra
Credit rating agency, India Ratings and Research (Ind-Ra) in its latest report has said that COVID-19 outbreak is likely to impact the revenue growth of construction companies in the near term, as the lockdown imposed by the state governments of some of the large Indian cities would obstruct the execution of infrastructure construction in them.

As per the report, typically, Q4 accounts for 30%-35% of the annual revenue of construction companies; of which a month’s lockdown can erode 8%-10%. The agency further noted that construction activities across construction hub cities such as Mumbai Metropolitan Region, Delhi, Pune, and Bangalore are likely to be stalled or progress at a significantly slower-than-anticipated pace for a major portion of March 2020 which may continue in April as well. It also said that companies with ongoing significant construction works in such cities are the ones likely to be the most affected, as they are turning out to be the epicentre of the outbreak.

Besides, Ind-Ra said that a large chunk of construction workers who consequently are heading to their home towns in the interiors of the country are likely to return only after the situation normalises, which can even be a month from now or even later. Consequently, the revenue trajectory is likely to be affected. The report also underlined that continued expenditure in the form of overheads and finance charges is also likely to affect the profitability of construction companies, owing to a lower base for absorption of these overheads.