India Ratings and Research have revised outlook negatively on the construction industry.

India Ratings and Research (Ind-Ra) has maintained an adverse outlook for 2020-21 (April-March) on the overall real estate sector. The government’s stimulus packages for the industry provide little hope, given the limited financial flexibility and restricted availability of credit to businesses.

Among players in grade-I residential real estate, commercial and retail project development and operations, the rating agency has held a stable outlook while for non-grade I players a negative outlook during the financial year.

The rating agency expects grade-I to continue to generate strong sales for the remaining part of the fiscal year 2019–20 as a consequence of the continuing industry restructuring in favour of grade-I residential players with stronger brand and execution capacity.

According to the Indian rating report, the market share of the top ten listed players doubled steadily from 7% in 2017-18 and by 6% in 2016-17 to 13% in 2019-20. This pattern is also expected to continue in 2020-21.

Conversely, in the face of liquidity problems due to decreased sales, negative free cash flows, stricter compliance with Real Estate (Regulation and Development) Act and credit stagnation from banks and other non-bank financing companies, non-grade-I player’s woes have increased, India Ratings said. In the current financial year, the rating agency feels that housing affordability is higher than in 2011-2012.