Highway tendering likely to pick up in H2, Toll growth strong: CareEdge Ratings

Tendering activity in the highway sector has remained muted in the first half of FY26, but a strong pick-up is expected in the second half, said Rajashree Murkute, Senior Director & Head of Infrastructure Ratings at CareEdge Ratings, in an interaction with ET Now.

According to Murkute, tendering usually slows in the first half of the year due to the Union Budget cycle and approval delays. However, this year’s activity was also impacted by revised bidding norms introduced by the Ministry of Road Transport and Highways (MoRTH). These changes, aimed at ensuring stronger players dominate the space and curbing aggressive bidding, limited the number of eligible participants.

“We expect tendering to gather pace in the second half, following the typical 30:70 split between H1 and H2. With more than 125 projects already identified, awarding activity should be strong in the coming months,” she said.

On the introduction of Additional Performance Security (APS), Murkute noted that while it will discourage non-serious bidders, it will not significantly affect well-capitalised players with strong balance sheets.

General Construction growth may be down 7–10% vis-a-vis last year

Execution, however, continues to face bottlenecks. Delays in approvals, land acquisition issues, and a low pipeline from previous years are expected to moderate construction growth by 7–10% compared to last year. Despite this, toll road traffic is projected to grow by 7–9% in FY26, driven by logistics demand, higher coal mining volumes, and strong freight movement.

Murkute also addressed the impact of the new annual FASTag pass. Passenger vehicle-heavy corridors may see a short-term impact, but she stressed that toll operators will be compensated under change-in-law provisions. Importantly, FASTag has improved transparency and attracted more global investors into the highway sector through InvITs and direct portfolio acquisitions.

“FASTag has actually emerged as an enabler rather than a dampener. It has boosted transparency and investor confidence in the sector,” she said.

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