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HDFC Securities Report
Labor elasticity and on-ground execution have a near-linear relationship. Our channel checks and managements Q4 FY20 results commentary also corroborate a similar trend with 20% labor availability translating to 20-25 % execution, while 55-60% labor availability is translating to 55-65% level of normal construction efficiency and so on. Execution efficiency is slightly higher on account of lesser site hindrances and lower man-hours spent on managing site traffic. Due to Covid-19 related lockdown and restriction on traffic movement, the site availability is better, and companies can execute round the clock. There is no restriction on movement of heavy vehicles and goods at the site. Hence, we believe faster the labor levels normalises for companies, better the chances of execution nearing pre-COVID-19 levels.
We see Larsen & Toubro Ltd., KNR Constructions Ltd., Dilip Buildcon Ltd., PNC Infratech Ltd., KEC International Ltd. and HG Infra Engineering Ltd. better-placed for recovery as they have been able to mobilise labor to near-normal pre-Covid-19 levels.
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