Infrastructure
Understanding COVID-19’s impact on infrastructure sector for optimizing growth strategies
21 May 2020
Context
- Client description: A leading steel product manufacturing services player
- Opportunity: The client wanted to understand the broad impact of COVID-19 on infrastructure sector and compare it with the effect during 2008 financial crisis. Furthermore, it wanted to understand how it can derisk its business and continue to grow in the testing times.
Our Approach
We followed a three-step process to conduct an in-depth analysis of the infrastructure segments.
1. Identification of key segments within infrastructure:
- Identified infrastructure segments with highest capital outlay
- Assessed their construction intensity to understand their level of interest for EPC companies
- Identified the top segments with the higher capital outlay and construction intensity
2. Deep assessment of the identified segments
- Identified the broad growth trends in the shortlisted segments, focusing on the metrics such as an increase in installed capacity over the past few years
- Identified key players in the segment and their broad market share (in terms of installed capacity)
- Identified key stuck and upcoming projects in the segment and their distribution among central government-owned, state government-owned and private firms
- Assessed the order book of EPC companies having higher exposure to the concerned segments and identified the variation in cash conversion cycle over the past few years
- Assessed the broad impact on different demand and supply factors for the segment during the 2008 financial crisis and compared it with the potential short, medium and long-term impact of COVID-19 on those segments
3. Expected future scenario
- Assessed the possible recovery scenarios based on the severity of COVID’s impact on the segments
- Identified key policy measures that can be taken by the government to accelerate recovery in the segments
- Determined sub-verticals within different segments that have been more resilient to COVID to drive focus on
- Provided future pipeline and key demand centers for client focus
Key Insights / Outcomes
Identified the impact on public and private sector companies across the segments
Built a deep understanding on the possible impact on payment cycle of EPC companies serving the segments
Mapped the key policy measures required for recovery in different segments
Praxis Value Delivered:
- The client understood the key infrastructure segments and understood the short, medium and long-term impact of COVID-19 on different demand and supply factors
- The client understood the possible recovery patterns in different segments
- The client also understood focus areas for future to derisk the business against COVID crisis
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