NewKerala.com

Budget 2026: Key Catalyst for Industrial Recovery Amid Weak Infrastructure Awards

The upcoming Union Budget 2026 is anticipated to be a crucial trigger for the industrial sector, with expectations of higher government allocation to revive domestic infrastructure ordering. Road awards by NHAI have been notably subdued in FY26, with a sharp decline compared to the previous year, raising hopes for budgetary support. EPC companies are increasingly diversifying into areas like solar power, railways, and battery storage to sustain growth amid the slowdown in traditional road projects. While private capital expenditure remains selective, a Budget-led revival in ordering could support an earnings recovery and re-rating for the industrial sector.

Key Points: Union Budget 2026 Seen as Trigger for Industrial Sector Revival

  • Weak road awards in FY26
  • Budget may boost infra allocation
  • EPC firms diversifying into non-road segments
  • Private capex remains selective
  • EPC valuations at cyclical lows
2 min read

Union Budget seen as catalyst for industrial recovery amid weak infrastructure awards in FY26: Report

Report expects higher govt allocation in Budget 2026 to revive infrastructure ordering, support EPC & capital goods firms amid weak FY26 awards.

"We believe the upcoming budget could provide increased allocation considering the weak awards in FY26 - HDFC Securities Report"

New Delhi, January 14

The upcoming Union Budget 2026 is expected to be a key trigger for the industrial sector, with higher government allocation likely to support a recovery in domestic ordering, particularly for infrastructure and capital goods companies, according to a report by HDFC Securities Institutional Research.

The report highlighted that road awards by the National Highways Authority of India (NHAI) have remained subdued so far in FY26, raising expectations that the Budget could provide additional support to revive project awarding.

It stated, "We believe the upcoming budget could provide increased allocation considering the weak awards in FY26".

In the first nine months of FY26, road awards stood at 1,951 km, sharply lower than 7,538 km in FY25, while construction activity also slowed to 4,621 km till November 2025 compared with 10,660 km in the previous year.

Despite the weak awarding trend, the bidding pipeline remains intact, with projects being finalised on schedule. NHAI has also taken steps to strengthen bidding norms and raise entry barriers to discourage non-serious bidders.

In addition, the report mentioned that the working capital releases under the Jal Jeevan Mission have started, with a sharper pick-up expected from Q4FY26, which should ease liquidity pressures for EPC players.

The report noted that awarding activity in other segments, such as private real estate, mining and urban infrastructure, has picked up during 9MFY26. It expects NHAI ordering to be back-ended in FY26, with total awards estimated at around Rs 500 billion.

Against this backdrop, EPC companies are increasingly diversifying into non-road segments such as solar power, battery energy storage systems, transmission projects, railways and river interlinking to sustain growth.

Private capital expenditure is expected to remain selective, with investments likely to focus on high-growth areas including renewables, transmission, data centres and semiconductors.

In the capital goods segment, the report said a broad-based recovery in private capex is still awaited, but transmission and distribution remain a strong pillar.

High-voltage direct current projects are expected to see robust ordering, supported by a pipeline of about Rs 0.8 trillion over the next two years, while demand for battery storage systems is likely to stay strong.

Overall, the report said EPC valuations are at cyclical lows, and any Budget-led revival in ordering could support earnings recovery and a re-rating of the industrial sector.

- ANI

Share this article:

Reader Comments

P
Priyanka N
Good to see the Jal Jeevan Mission funds are being released. Water infrastructure is as critical as roads. The budget must ensure these projects reach the villages that need them most. Easing liquidity for contractors is a positive step.
R
Rahul R
The sharp drop from 7,538 km to 1,951 km in road awards is alarming. While diversification into solar and railways is good, our core highway network needs consistent development. The budget must address this gap urgently.
A
Aman W
Respectfully, I hope this budget allocation doesn't just look good on paper. We've seen projects get announced with fanfare but then face years of delays. Stronger bidding norms are good, but we need faster execution on the ground.
S
Sarah B
Interesting analysis. The pivot towards battery storage and HVDC projects shows India is thinking about future energy grids. Private capex in semiconductors and data centers could be a real game-changer for the tech manufacturing ecosystem.
K
Karthik V
As someone from a tier-2 city, urban infrastructure development is key. Glad to see it's picked up. Better public transport and waste management will improve quality of life more than another highway sometimes. Budget should balance both.

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

Leave a Comment

Minimum 50 characters 0/50