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Mumbai, 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, according to a report. Conducive policies, rising investor interest and strong execution speed are expected to drive the capital outlay in the sectors, the report by Crisil Ratings said on Tuesday. The pace of road <keyword id="34617" type="General" weightage="20" keywordseo="construction" source="Orion">construction</keyword> and capacity addition in renewables is seen growing by 25 per cent and 33 per cent, respectively, in the current and next fiscal, and the <keyword id="46930" type="General" weightage="20" keywordseo="capex" source="Orion">capex</keyword> growth is expected to sustain over the medium term, the report said. Crisil Ratings Managing Director Gurpreet Chhatwal said 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, 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. Chhatwal said the levels at which companies are bidding for projects is a key monitorable going forward. The agency's Senior Director Manish Gupta said while the last two years have seen aggressive bidding, there are no challenges on the implementation side. Gupta said investor interest has been encouraging, with Rs 75,000-80,000 crore raised through equity and asset monetisation in the past two fiscals in both these sectors. Continued focus on asset monetisation and equity raising, along with healthy cash flows, will keep the capital structure balanced in both sectors, the report said. According to the report, 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. About the upcoming general elections, Gupta said the government is aware of it and is trying to finish as many projects as possible before the polls. Replying to a question on the recent slowdown in the pace of road construction, Chhatwal said every year, the pace of work is higher in the second half of the fiscal and the agency expects the same to continue this fiscal as well. The pace of road construction will increase to 34 km per day by the end of 2024-25, a 25 per cent jump over the current pace, its Chief Rating Officer Krishnan Sitaraman said. Timely asset monetisation will remain important in the roads sector as InvITs continue to grow, the report said, adding that for renewables, if geopolitical developments affect supply chains, it may impact the internal rate of return and pose a risk to estimates.

Road, renewables capex likely to rise by 35% in FY24 & FY25: Crisil

<ul class="summary-list"><li>As demand continues to outstrip supply, <keyword id="48670" type="CITY" weightage="60" keywordseo="Morgan-Stanley">Morgan Stanley</keyword> sees US businesses rushing to fill the breach with <keyword id="6355120" type="UNKNOWN" weightage="60" keywordseo="investment">investment</keyword>.</li><li>The <keyword id="6355272" type="UNKNOWN" weightage="60" keywordseo="bank">bank</keyword> highlighted three underlying trends driving long-term <keyword id="46930" type="COMPANY" weightage="60" keywordseo="capex">capex</keyword>: "near-shoring" supply chains closer to home, automation, and decarbonization.</li><li>Analysts named Rockwell Automation and Eaton Corp, two industrial equipment companies, as strong buys. </li></ul>As demand continues to outstrip supply, Morgan Stanley sees US businesses rushing to fill the breach with investment, boosting stocks in the construction and industrial sectors, analysts wrote in a note on Thursday.Analysts described a "red hot capex cycle," driven by supply constraints and sky-high demand, with investment growth exceeding GDP through the end of 2022. Looking at four decades of data, capex running above GDP has tended to predict robust sales in sectors that build physical structures - like construction, engineering, and industrial conglomerates - they wrote.But in those sectors, the association between strong capex and stock market performance is less straightforward, in part because cyclical increases in capex can be short-lived.So to capitalize on booming investment, the bank pointed to three underlying trends that are likely to sustain capex in a more durable way: "near-shoring" supply chains closer to home, automation and digitization, and decarbonization. Stocks that are in a position to gain from these long-term developments are the best bets for the capex surge. In particular, analysts named Rockwell Automation and Eaton Corp, two industrial equipment companies, as strong buys. On Rockwell, which sells industrial automation tech, analysts argued that automation tends to far exceed industrial production growth during hot capex periods and that <keyword id="31671" type="CITY" weightage="100" keywordseo="markets">markets</keyword> are underestimating the business. Eaton, a electrical equipment manufacturer, is set to benefit from a wave of electrical equipment installation as firms invest in capital.Year-to-date, Rockwell and Eaton are up 17% and 28%, respectively.

Stocks in the construction and industrial sectors are set to soar as a 'red hot capex cycle' kicks in, Morgan Stanley says

<keyword id="125045" type="General" weightage="20" keywordseo="fitch-ratings" source="Orion">Fitch Ratings</keyword> reports that Asia-Pacific (<keyword id="156416" type="General" weightage="20" keywordseo="apac" source="Orion">APAC</keyword>) oil and gas (O&amp;G) producers are expected to uphold capital expenditure (<keyword id="46930" type="General" weightage="20" keywordseo="capex" source="Orion">capex</keyword>) for the upstream segment, primarily driven by national <keyword id="6357014" type="General" weightage="20" keywordseo="energy" source="Orion">energy</keyword> security and the growing need for energy transition in the region. According to Fitch Ratings, despite these financial commitments, APAC O&amp;G companies have more flexibility for capex as they have significantly reduced leverage in 2022. Additionally, most of these companies enjoy robust access to funding, thanks to their close affiliations with sovereign entities. The rising energy demand in the APAC region remains a crucial factor, motivating rated issuers to focus on maintaining or enhancing their reserves, especially in natural gas, a pivotal transitional energy source. Moreover, integrated producers are gearing up for substantial downstream investments to bolster their petrochemical capabilities. In the medium term, Fitch anticipates a swift increase in capex for rated issuers' energy transition endeavours, albeit starting from a relatively small base. Despite a growing emphasis on decarbonisation targets, fossil fuels are expected to remain the dominant source of earnings for APAC O&amp;G producers in the medium term. While many issuers have outlined long-term decarbonisation objectives, concrete plans to achieve these targets often lack implementation details. <keyword id="6422456" type="General" weightage="20" keywordseo="environmental" source="Orion">Environmental</keyword> regulations are predicted to become more stringent, driving the transition towards cleaner energy sources. However, this transition may be slower in the APAC region compared to Europe, where fossil fuels continue to be the primary energy source in key Asian economies. New fossil fuel projects could encounter increased regulatory challenges, especially in more developed APAC markets like Australia. Most of the APAC O&amp;G producers rated by Fitch are national oil companies or their subsidiaries. Their credit ratings are closely linked to changes in the ratings of sovereigns or government-owned parent organizations since their assessments are predominantly conducted on a top-down basis. For issuers rated on a standalone basis, they have ample rating headroom, unaffected by the current trends in capex for energy transition.

APAC Oil and Gas producers maintain capex amidst energy transition: Fitch Ratings

New Delhi, Oil sector public sector undertakings (PSUs) may have to bear a <keyword id="9705803" type="UNKNOWN" weightage="20" keywordseo="larger-share">larger share</keyword> of <keyword id="10488841" type="UNKNOWN" weightage="20" keywordseo="additional-dividend-payment">additional dividend payment</keyword> to the government this year with almost all companies falling behind on their capex plan for the current fiscal. As of November, the capex of PSU oil companies put together stands at ₹46,303 crore, less than 50% of the annual target of ₹98,522 crore. The government has asked companies to complete at least 75% of capex till the end of December quarter. But this looks highly unlikely now pushing the case for higher dividend payout. In meetings with PSUs, Finance Minister Nirmala Sitharaman had stressed on the need for PSUs to step up <keyword id="6355120" type="UNKNOWN" weightage="20" keywordseo="investment">investment</keyword> during the time of the pandemic to boost overall sentiments and kickstart investment climate in the country. She had specifically urged companies to complete at least 75% of capex target by December-end and more than 100% by March. "It is a double whammy for PSUs now. They have to cough up more either through investments or through payment of additional dividends. It should also be seen that the companies are finding it difficult to meet capex targets given financial and project implementation constraints. Covid has severely dented demand and slowed project implementation. Consequently, there is already a strain on their resources that would get heightened as additional dividend would have to be paid," said a top official of a PSU, asking not to be named. While almost all PSUs are facing delays and difficulties in stepping up the gas and increasing investments, the situation among companies in the oil and gas sector looks worse. Slow demand conditions in early part of the year resulted in slowing of several capex plans. Though the situation has improved from November onwards, still its a long way to go for normalcy to return in the sector. For the government, oil sector PSUs are also set to make big inventory gains due to firming up of crude prices, and hence they are being looked at for higher interim dividend or special dividend and a few may also be considered for share buyback depending on market conditions. Among the oil and gas PSUs, the worse performer in terms of capex spend is the country's largest oil and gas explorer ONGC and largest public sector refiner <keyword id="6356834" type="DOMAIN" weightage="20" keywordseo="indian-oil-corporation">Indian Oil Corporation</keyword>. According to oil ministry's <keyword id="819806" type="COMPANY" weightage="20" keywordseo="Petroleum-Planning-and-Analysis">Petroleum Planning and Analysis</keyword> Cell (PPAC), while ONGC had completed just ₹14,959 crore worth of capex upto November out of FY21 investment target of ₹32,502 crore, IOC's capex upto November is ₹12,104 crore against annual target of ₹26,233 crore. Similarly, HPCL has completed capex of ₹5,658 crore (upto November) against target of ₹11,500 crore; Gail India - ₹2,614 crore against annual target of ₹5,412 crore; Oil India - ₹2,136 crore vs ₹3,877 crore target; MRPL - ₹631 crore vs ₹1,150 crore, OVL - ₹3,765 crore vs ₹7,235 crore. Among the worst performer on capex is privatisation-bound <keyword id="155363" type="DOMAIN" weightage="20" keywordseo="Bharat-Petroleum-Corporation-Ltd">Bharat Petroleum Corporation Ltd</keyword> (BPCL) which has spent just ₹3,716 crore against target of ₹9,000 crore. Officials sources said that PSUs with stock prices higher than the book value and who have sufficient cash funds may also be asked to shell higher dividend in FY21. A call will be taken after the third quarter results of companies are declared late January or early February next year. With the central government being the largest shareholders in PSUs, higher dividend would largely help it to fill its coffers at a time when revenue is constrained due to a overall fall in economic activity during the pandemic while expenditure has risen sharply. Dividend from non-financial PSUs have been budgeted at ₹65,747 crore in FY21. Any increase in this will give a boost to non-tax revenue of the government and help its bridge the rising fiscal deficit that as per initial estimate is now pegged close to 8% of GDP. Finance Minister Nirmala Sitharaman and her predecessors, including the late Arun Jaitley and P. Chidambaram, had maintained the policy of advising non-financial state-owned companies that if they are not utilising their cash reserves for capex needs, they should give it to the Centre through dividends or share buybacks. As per the guidelines issued by disinvestment department DIPAM, every CPSE is required to pay a minimum annual dividend of 30% of PAT or 5% of the net-worth, whichever is higher. Apart from oil sector, several PSUs in power and mining space have completed just about 40% annual capex by November due to constrained business environment. SEE ALSO: <a href="https://www.businessinsider.in/stock-market/news/top-stocks-to-watch-mrs-bectors-ril-bharti-airtel-vodafone-idea-ilfs-interglobe-aviation-future-group-deepak-nitrite-jubilant-foodworks-and-others/articleshow/79933826.cms">Top stocks to watch – Mrs Bectors, RIL, Bharti Airtel, Vodafone Idea, IL&amp;FS, InterGlobe Aviation, Future Group, Deepak Nitrite, Jubilant FoodWorks, and others</a> <a href="https://www.businessinsider.in/thelife/personalities/news/from-taking-on-yahoo-to-being-tamed-by-chinas-communist-party-its-been-a-roller-coaster-decade-for-jack-ma/slidelist/79935613.cms">From taking on Yahoo to being tamed by China’s Communist Party— it’s been a roller coaster decade for Jack Ma</a> <a href="https://www.businessinsider.in/careers/news/ey-is-looking-to-hire-9000-techies-in-2021-to-boost-its-digital-services/articleshow/79936576.cms">EY is looking to hire 9,000 techies in 2021 to boost its digital services</a>

Revenue constrained government may push oil PSUs short on FY21 capex to pay higher dividend

Hopes for a <a href="http://www.businessinsider.com/capex-stagnant-2015-12">capital expenditure (capex) boom remain on hold</a>.Morgan Stanley's Capex Plans Index fell to 13.4 in December, the lowest reading since July 2013."Continued softness in capex plans echoes the declining trend in capital equipment orders and a heavy inventory correction that has weighed on the manufacturing sector. The effects of dollar strength and uncertainty over falling energy prices have been persistent themes in regional manufacturing surveys in 2015," Morgan Stanley's Ellen Zentner said in a note to clients on Tuesday titled "Damage lingers."It's worth noting that while manufacturing is an important part of the US economy, <a href="http://www.businessinsider.com/how-mbas-and-phds-perceive-the-economy-2015-12">it represents a small portion of it</a>.<div class="KonaFilter image-container display-table"><div><div class="image">Morgan Stanley</div></div></div>"In our 2016 US Economic Outlook, we forecast a modest expansion in equipment investment in 2016 as the trade- weighted dollar moves into a slower pace of appreciation, but the detrimental effects of past appreciation linger and persistently weaker global trade keeps growth subpar," Zentner said. <div class="margin-top"> <h3>NOW WATCH: <a href="http://www.businessinsider.com/jim-cramer-fed-interest-rates-james-bullard-dennis-lockhart-2015-12">Jim Cramer blasts the Fed's Bullard and Lockhart for 'not caring about the facts'</a></h3> <div> <div> <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="djcGRqeTpejA4OQnPlzd40fGUMCLR9Pv" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div> </div> </div> </div>

You Searched For "capex" and got 5 results

Road, renewables capex likely to rise by 35% in FY24 & FY25: Crisil

PTI

Stocks in the construction and industrial sectors are set to soar as a 'red hot capex cycle' kicks in, Morgan Stanley says

Ethan Wu

APAC Oil and Gas producers maintain capex amidst energy transition: Fitch Ratings

ANI

Revenue constrained government may push oil PSUs short on FY21 capex to pay higher dividend

IANS

'Damage lingers' in US capex

Sam Ro

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