NewKerala.com

India's Construction Sector to Rebound with 6-8% Revenue Growth in FY27

India's construction sector is projected to see revenue growth accelerate to 6-8% in 2026-27 after two years of muted performance. The current fiscal year is expected to see only 2-4% growth, pressured by shrinking order books for road contractors and a slowdown in Jal Jeevan Mission projects. However, diversified players focused on power, urban infrastructure, and water segments are likely to benefit from continued investments. A recovery is forecasted from 2026-27, driven by healthy budgetary capex, improved execution, and a pick-up in road sector and JJM project awards.

Key Points: India Construction Revenue to Grow 6-8% in 2026-27: ICRA

  • Muted 2-4% growth in 2025-26
  • Road contractors face pressure
  • Diversified players to benefit from power, urban infra
  • EPC firms in mining, power see 8-10% growth
  • Geopolitical challenges for West Asia-focused firms
2 min read

Revenue growth of India's construction players to touch 6-8 pc in 2026-27

ICRA report forecasts a recovery for India's construction sector, with revenue growth hitting 6-8% in 2026-27 after muted years, led by power and urban infra.

"Order inflows will likely expand by around 10 per cent in 2026-27, led by a recovery in the road sector awards and JJM projects. - ICRA Report"

New Delhi, March 30

India's construction players are expected to witness a revenue growth of 6-8 per cent in 2026-27 after two bleak years, a report said on Monday.

Construction revenue growth is likely to remain muted in 2025-26 at 2 to 4 per cent, with increased pressure on road contractors, the report from ICRA said.

The shrinking order books for road contractors amid muted project awarding by the Ministry of Road Transport and Highways led to the muted growth.

Further, a slowdown in Jal Jeevan Mission‑related construction also played a part in the slowdown.

Road focused players are expected to witness pressure on their credit profiles, amid declining margins and muted revenue visibility but the diversified players are likely to benefit from continued investments in power, urban infrastructure and water (drinking and sanitation) segments, the ratings agency said, maintaining a 'stable' outlook on the construction sector.

Engineering, procurement and construction (EPC)) players focused on urban infrastructure projects, mining, power and irrigation sectors continued to witness a healthy growth. They are expected to see a revenue growth of 8-10 per cent in 2026-27.

Order inflows in 2025-26 benefited from higher awards in mining and water segments, recovery in road awarding remained gradual, with the ratings agency expecting a more meaningful pick-up from 2026-27.

Healthy budgetary capex and an improvement in execution will lead to the recovery, the report forecasted. Order inflows will likely expand by around 10 per cent in 2026-27, led by a recovery in the road sector awards and JJM projects, with the latter witnessing an extension in timeline till December 2028, with higher outlay.

EPC companies centred on West Asia will likely witness some pressure on execution momentum due to geopolitical challenges, according to Suprio Banerjee, Co-group Head, Corporate Ratings, ICRA.

The ratings agency estimated the operating profitability for construction companies to stay in the range of 10.3-10.8 per cent in 2025-26, and 10.1-10.6 per cent in 2026-27, owing to pressure on bitumen prices.

The price of the crude oil derivative rose due to geopolitical tensions in West Asia, and intense competition in the sector.

- IANS

Share this article:

Reader Comments

S
Sarah B
As someone working in project finance, this is a realistic assessment. The pressure on margins due to bitumen prices is a real concern. Companies need to hedge their risks better.
P
Priya S
The extension of Jal Jeevan Mission till 2028 is excellent news! Water and sanitation are critical for rural India. Hope the execution matches the outlay this time. 🙏
A
Arjun K
While the outlook is stable, I respectfully disagree on the growth being 'healthy' for everyone. For small and mid-sized road contractors, these are very tough times. The report should highlight their challenges more.
V
Vikram M
Geopolitical issues affecting West Asia projects is a reminder that our companies need to strengthen their domestic order books. Atmanirbhar Bharat should start with our infrastructure companies being less dependent on foreign projects.
M
Michael C
Interesting analysis. The split between diversified players and road-focused ones is stark. It shows which sectors the government is prioritizing for capex. Power and urban infra seem to be winning.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

Leave a Comment

Minimum 50 characters 0/50