Are toll collecting companies better placed than pure play construction companies?
Published On: Thursday, June 25, 2020 | By: Team KnowMyStock
As the nationwide lockdown is easing in a phased manner liquidity crunch and a labour shortage are the two major constraints for the construction sector. Given this, companies that earn revenues from the tolling of projects and executing their own projects instead of pure construction companies are better placed than the pure-play construction companies. According to industry estimates, labour shortage is as high as 50% in the case of some construction projects. This has caused execution delays thereby increasing project costs, which will be borne by the construction companies. Analysts believe that companies that have the right balance of construction and build, operate, and toll projects, have limited downside in terms of cost escalation and loss of revenues.
Tolling has reached 75% of the pre-lockdown days for these companies, according to CRISIL. This adds to the attractiveness of companies which have adequate funds to complete their road projects and which execute their own construction projects.
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