Indian construction sector outlook positive for 2007-08 – Fitch

MUMBAI – Fitch Ratings said it sees the outlook for the Indian construction sector in 2007-08 as positive, boosted by increased investment in infrastructure projects and real estate.

The ratings agency noted that while Indian construction companies have witnessed sharp growth in their order books and revenue with the increase in investment projected over the next five years, the majority of the profit in terms of revenue and earnings will start accumulating from fiscal year 2009.

Fitch also said it imagines that the industry to exhibit negative cash flow from operations due to increased working capital requirements. Substantial investments in real estate will also put pressure on the industry credit profile, it added.

The ratings agency warned that credit profiles are likely to deteriorate, with increased debt required during the mobilisation phase to complete the massive projects but will get better substantially over the long-term once these projects achieve the stable revenue phase.

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