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Crisil Ratings in its latest report has said that the total capital outlay for roads and renewables in 2023-24 and 2024-25 is likely to jump by 35 per cent to Rs 13 lakh crore compared to that in the last two fiscal years. Conducive policies, rising investor interest and strong execution speed are expected to drive the capital outlay in the sectors. 

According to the report, the pace of execution of renewable energy projects is set to increase 33 per cent to 20 GW per annum over the current and next fiscal as compared to 15 GW per annum in the past two fiscal years, supported by a healthy executable pipeline of 50 GW of projects as of March 2023. Similarly, it said road construction is set to improve 25 per cent to 12,500-13,000 km annually over the current and next fiscal, driven by healthy awarding of projects and step-up in execution. It said the levels at which companies are bidding for projects is a key monitorable going forward.

The report noted that continued focus on asset monetisation and equity raising, along with healthy cash flows, will keep the capital structure balanced in both sectors. It also said despite higher capital outlays, rated renewables and road entities should have a healthy average debt service cushion of 1.2x-1.3x over the tenure of debt on their balance sheets, which supports their credit profiles.