Earlier this week, rating agencies said the road sector saw a large number of upgrades in the half year ended September 30.

Rating agency ICRA said the sector saw 15 upgrades in FY22 versus only 6 downgrades; and in FY23 too, the number of upgrades is going strong. This is due to the fast growth of traffic and of tolls.

In an interview with CNBC-TV18, Vijay Kumar, head and vice president of finance at NCC and Rajeshwar Burla, group head of corporate and infrastructure ratings at ICRA discussed the prospects for the sector.

Burla said, "If you look at the state governments, the overall fiscal bandwidth for a good number of states has been constrained because of which the new project awards remain subdued. As a result of which most of these developers are shifting towards central government funded projects, be it railways or roads and drinking water supply projects."

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While talking about weak numbers, he said, "Because of the high surge and volatility in the commodity prices, many of the developers have delayed the procurement of materials and have gone slow on the execution amidst this uncertainty because of which the overall pace of execution has gone slow in the first quarter."

However, the rating agency expects the pace of execution to ramp up sharply from Q3FY23, post the monsoon season.

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Meanwhile, Kumar said, "We are seeing a bit of an improvement from the second quarter onwards because of more predictability in execution."

For the entire discussion, watch the accompanying video.

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