Infrastructure players hailed the reduction in repo rate and said the stage appears set for a lower interest rate regime.
Praveen Sood, Group CFO, Hindustan Construction Company, said a decent Budget followed by the rate cut is a good sign. It signals that the Centre and the RBI are no longer worried about inflation and the development agenda is getting due priority.
The infrastructure sector, which is on high leverage, will benefit by way of less interest cost and improved margins.
Rajhoo Bbarot, Chairman & Managing Director, Atlanta Ltd, said, “This will immensely help the infrastructure sector, particularly the roads sector which is under tremendous pressure due to the high interest rate regime. Generally, lenders charge interest between 12-12.5 per cent per annum for infrastructure development projects during construction period.”
Infrastructure companies expect a reduction of 50 bps. Atlanta has debts of about ₹800 crore and will roughly benefit by ₹4 crore a year.
Jayant D. Mhaiskar, Vice-Chairman & Managing Director, MEP Infrastructure Developers, said it is welcome news for the sector. The company has completed 73 projects with a total of 131 toll plazas and 825 lanes across 12 States.
Shishir Mehta, Partner, Khaitan & Co, said the rate cut sends a pro-growth signal to the markets and also indicates that the RBI is broadly in synch with the fiscal measures taken by the Centre in the Budget.