Finance Minister Nirmala Sitharaman may increase the budget allocation for the Ministry of Road Transport and Highways (MORTH) by 6 percent. She can allocate Rs 2.9 lakh crore for highways. Several officials with knowledge of the matter told Moneycontrol this. In the last 10 years, the allocation of the Highways Ministry has increased almost 8 times. The government is also trying to promote private investment in the highways sector.
2.72 lakh crore allocation for FY
Government for FY25 MoRTH The allocation was increased by only three percent. finance minister Nirmala Sitharaman Had allocated about Rs 2.72 lakh crore. A year before this, Rs 2.64 lakh crore was allocated. Officials with knowledge of the matter said that the government is planning to implement the new Build-Operate-Transfer (BOT) wants to give new projects on the model. For this, the government has identified 15 important road projects, whose value is Rs 44,000 crore. Under this, a total of 937 kilometers of road will be built.
There will be a rise in these shares
Market experts say that if Finance Minister Nirmala Sitharaman increases the allocation for MoRTH on February 1, it will impact the stocks of road construction companies. These include leading construction companies like L&T, IRB Infra, Dilip Buildcon, NCC Infra and Afcons Infra. Shares of Afcons Infrastructure have disappointed investors in the last one year. During this period its return has been only 4.85 percent. The performance of L&T shares has also been poor in the last one year. It has given a negative return of 2 percent during this period.
Poor performance of most road construction companies
Dilip Buildcon’s shares have risen only 2.99 percent in one year. IRB Infra shares have given about 11 percent returns in one year. The return on shares of NCC Infra has been around 27 percent in the last one year. This means that the performance of shares of most road construction companies has been weak in the last one year. Experts say that Lok Sabha elections were in the first quarter of this financial year. This had an impact on construction activities. Due to the implementation of the code of conduct during the elections, the government also had to reduce capital expenditure.
Also read: Budget 2025: Government may increase tax exemption on health insurance, insurance stocks will rocket
Only one BOT project was awarded in this financial year
The pace of award of projects on BOT model has been slow this financial year. Only one BOT project was awarded till November 2024, whose valuation was Rs 4,734 crore. An email sent to the Ministry of Road Transport and Highways for more information in this regard did not receive any response. Earlier this year, MoRTH had introduced the BOT project framework after the changes. After the updated guidelines, it is expected that more private construction companies may show interest in acquiring road projects.