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Business Standard
2 days ago
- Business
- Business Standard
Construction industry margins to stay between 10.25-10.75% in FY26: Icra
Amid intense competition in the sector, operating margins of construction industry players are estimated to remain steady at 10.25-10.75 per cent in FY26, down from 10.6 per cent in FY25, according to Icra. This marks a sharp decline from the margins in FY21, which stood at 13-14 per cent. The ratings firm has also revised its revenue growth estimate for the industry in FY26 to 6-8 per cent, down from the earlier guidance of 8-10 per cent, due to continued headwinds in road-awarding activity as well as a slowdown in the execution of Jal-Jeevan mission-related projects. However, an expected ramp-up in other segments, especially urban infrastructure and irrigation, may result in relatively better performance for the industry in FY26, compared to flat growth during FY25. Further, the aggregate order book/operating income for Icra's sample set of entities is expected to be 3.5x as of March 31, 2026, providing adequate revenue visibility for industry participants. The aggregate order book/OI was 3.4x as of March 31, 2025. Icra's sample set features 19 companies with a combined turnover of almost Rs 1.3 trillion in FY25. Suprio Banerjee, vice president and co-group head, corporate ratings at Icra, said, 'Contractors, largely focused on the road segment, are likely to underperform compared to broader trends, owing to the slowdown in order-awarding activity from the MoRTH/NHAI. Several mid-sized road construction entities have an order book/revenue ratio of less than 2.0 times, indicating imminent stress on their revenue prospects in FY26, far below the industry average of around 3.5 times." However, players focused on segments like urban infrastructure or the energy sector are expected to sustain double-digit revenue growth in FY26. The majority of road projects under the MoRTH/NHAI were awarded at a sizeable discount compared to the authority's base price, indicating heightened competition. The competition in other sectors, such as metro, water supply, and sanitation, has also intensified, with new entrants trying to diversify their order books, Icra noted. The operating margins of players are expected to remain under check due to aggressive competition, although stable commodity prices and operating leverage benefits should provide some support to profitability. 'While debt levels are likely to increase to support higher working capital requirements, the corresponding operational leverage benefits are projected to keep the interest cover adequate at 3.5-3.8 times in FY26. Given the moderate leverage and satisfactory debt coverage metrics, Icra maintains a stable outlook on the construction sector,' Banerjee added. Construction activities — particularly road projects — have been notably affected due to lower fresh order inflows following the enforcement of the model code of conduct in Q1 FY25, coupled with execution-related challenges due to an extended monsoon season and a transition to milestone-based billing.
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Business Standard
2 days ago
- Business
- Business Standard
India's core sector growth in June tepid at 1.7%, shows govt data
The growth in the output of India's eight key infrastructure industries remained subdued in June, even as it accelerated to a three-month-high at 1.7 per cent year-on-year, compared to a revised 1.2 per cent in May, data released by the Department for Promotion of Industry and Internal Trade (DPIIT) on Monday showed. The provisional estimate for May was 0.7 per cent. In June last year, the core sector grew at 5 per cent. With the core sector accounting for 40 per cent of the index of industrial production (IIP) growth, the slowdown may weigh on overall industrial growth as well. During the first quarter of the financial year 2025-26 (FY26), core sector comprising of eight sectors- coal, steel, cement, fertilisers, electricity, natural gas, refinery products, and crude oil- grew at a measly 1.3 per cent, compared to a robust 6.2 per cent during the same quarter a year ago. During June, five out of the eight sectors witnessed contraction – coal (-6.8 per cent), crude oil (-1.2 per cent), natural gas (-2.8 per cent), fertiliser (-1.2 per cent) and electricity (-2.8 per cent). On the other hand, production of refinery products, steel, and cement witnessed robust growth of 3.4 per cent, 9.3 per cent and 9.2 per cent, respectively in June, compared to the same period a year ago. Aditi Nayar, chief economist at Icra, said that while an elevated base weighed upon coal output, excess rains in the latter half of June impacted electricity generation. 'Encouragingly, the output of the cement and steel sectors rose by a robust 9.2-9.3 per cent in June, although this was supported by a favourable base in the case of the former. The growth in volumes of these segments has been quite healthy in Q1FY26, which implies that the construction sector is poised to record a robust GVA growth in the quarter. Given the subdued growth in core output, Icra expects the IIP growth to print at 1.5-2.5 per cent in June 2025,' Nayar said.


Mint
14-07-2025
- Business
- Mint
Wholesale inflation turns negative, hits 21-month low in June
India's wholesale price index (WPI)-based inflation fell to a 21-month low of -0.13% in June, marking the first negative reading since October 2023, according to provisional data released by the ministry of commerce on Monday. The WPI, a proxy for producers' prices, stood at 0.39% in May, 0.85% in April, 2.25% in March, 2.38% in February, and 2.51% in January. The reading was below expectations, with prices rising less than the 0.52% projected by economists in a Reuters poll. A decline in prices of food, non-food manufacturing, fuel and power segments contributed to the dip in the overall headline print. The fall in WPI-based inflation for June was largely led by a fall in food prices amid softer prints for fruits and vegetables, pulses, cereals, spices, and edible oils, said Rahul Agrawal, senior Economist, Icra. 'Among the non-food items, the deflation in fuel and power also widened between these months, exerting downward pressure on the headline print,' Agrawal said. Food prices, which make up 24.38% of the index, fell 0.26% annually in June, compared to a 3.30% and 1.72% rise in April and May, respectively. Cereal prices rose 1.44% on-year, easing from the 2.56% increase recorded in May. Meanwhile, vegetable prices contracted by 22.65%, a deeper drop than the 21.62% decline the previous month. Fruit prices rose 1.59%, much lower than May's 10.17% increase. Milk prices rose by 2.26% in June, down from 2.66% in the previous month. 'The seasonal sequential uptick in food prices has been relatively modest in July 2025 so far, which is expected to keep food prices in the deflationary zone, unless there is an unusual surge in such prices in the remaining part of the month, especially for vegetables,' Agrawal added. Manufactured product prices, which account for about 64% of the WPI, increased by 1.97% annually in June, lower than the 2.04% increase reported in May and the 2.62% increase in April. Fuel and power prices contracted 2.65% in June, compared to a 2.27% contraction in May and a 3.76% contraction in April. The prices of primary articles—covering food, non-food articles, minerals, crude oil, and natural gas—contracted by 3.38% annually in June, compared to a 2.02% contraction in the previous month. Overall, Icra expects the headline WPI to remain in the deflationary territory in July despite an unfavourable base, amid the sustained annual deflation in food and crude oil prices. In June, the Reserve Bank of India (RBI) decided to cut the repo rate by 50 basis points to 5.5%. While announcing the monetary policy decision on 6 June, RBI governor Sanjay Malhotra acknowledged that gross domestic product (GDP) growth remains lower than aspirations, but the central bank retained its forecast at 6.5% for 2025-26. The RBI also lowered its inflation forecast by 30bps, with retail inflation for 2025-26 now pegged at 3.7%.


Time of India
09-07-2025
- Business
- Time of India
Domestic pharma industry will have to pass on high tariff impact to US consumers
The domestic pharmaceutical industry will have no choice but to increase prices of products meant for the US market if the Trump administration goes ahead and enforces up to a 200 per cent import tariff, sources said. US President Donald Trump has said the country will impose tariffs on pharmaceutical imports and on copper. He noted that the tariff on pharmaceuticals could go up to 200 per cent. "It is still an evolving situation. We think that it (tariff) cannot be that much because it would also increase the cost for buyers in the US. In the worst-case scenario, if it happens, then we will have to increase the prices accordingly, we don't have a choice there as we operate on low margins," a senior industry executive said. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Play War Thunder now for free War Thunder Play Now Undo Smaller drug firms operating on thin margins can face severe pressure, potentially forcing consolidation or closure, he noted. India currently levies around 10 per cent import duty on American drugs, while the US doesn't charge any import duty on Indian drugs. Live Events Icra Vice President & Sector Head Deepak Jotwani said the US is a key market for most Indian pharma companies, accounting for 30-40 per cent of their total revenue. "Imposition of high tariffs by the US administration on pharmaceutical imports could have an adverse impact on the Indian pharma industry as some increase in costs may need to be absorbed by the companies," he added. Indian pharma companies largely export generics to the US market, which is already subject to a high competitive intensity, he added. Imposition of high tariffs could weigh on Indian pharma export growth and profitability, he stated. "That said, the US has a high dependence on Indian pharma for generics and a tariff shock could result in healthcare cost inflation and even shortages," Jotwani said. Further, Indian pharma companies may need to look to accelerate their diversification efforts and increase focus on other geographies. Indian pharmaceutical companies supply a substantial proportion of drugs to US residents, with four out of ten of all prescriptions filled in the US in 2022 being supplied by Indian companies. As per industry sources, overall, medicines from Indian companies provided USD 219 billion in savings to the US healthcare system in 2022 and a total of USD 1.3 trillion between 2013 and 2022.


Reuters
01-07-2025
- Business
- Reuters
India's Adani Enterprises to sell 2-5 year debt at public bond sale next week, sources say
MUMBAI, July 1 (Reuters) - Indian billionaire Gautam Adani's flagship firm plans to raise up to 10 billion rupees ($116.77 million) through a retail bond issue opening for public subscription next week, two sources aware of the development told Reuters on Tuesday. Adani Enterprises ( opens new tab will sell two-year, three-year and five-year bonds through the issue, which will remain open for subscription from July 9 to July 22, the sources added. The company will pay an annual coupon of 8.95% on its two-year bonds, 9.15% on three-year bonds and 9.30% on five-year bonds, and will also have an option to defer interest payment to maturity, the sources said. For investors opting for quarterly payouts, the coupon will be 8.85% on three-year and 9.00% on five-year notes, they added. Adani Enterprises did not reply to a Reuters request for comment. This marks Adani Enterprises' second retail bond sale within a year. In September 2024, it raised 8 billion rupees via its debut public issue, offering two, three, and five-year bonds at coupons of 9.25%, 9.65%, and 9.90% respectively, indicating a 30–60 basis point drop in rates across tenors this time. The proposed issue, rated AA- by Icra and Care Ratings, includes a greenshoe option of 5 billion rupees. Nuvama Wealth Management, Trust Investment Advisors and Tip Sons Consultancy Services will be the lead managers for the bond sale, the company said. Last month, the company raised $750 million from a group of international banks. In November, U.S. authorities indicted Gautam Adani and his nephew, Sagar Adani, over alleged bribery and misleading of investors in connection with U.S. fundraising. Gautam Adani denied any wrongdoing last week, telling shareholders that no individual from the group had been charged under the U.S. Foreign Corrupt Practices Act. Adani Group and its 13 offshore investors have also been facing an investigation by the Securities and Exchange Board of India (SEBI) since Hindenburg Research in 2023 alleged the group's improper use of tax havens. The group has consistently denied any wrongdoing. ($1 = 85.6375 Indian rupees)