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Key Points

India's infrastructure sector struggled in Q4FY25 with revenues dropping 4% year-on-year despite a rise in order inflows. Road construction companies were hit hardest, seeing a 15% revenue decline, while urban infra players performed relatively better. Margins also contracted, falling 80 basis points YoY to 10.3% due to payment delays and budget constraints. While wagon manufacturers saw strong growth, analysts remain cautious about the sector's outlook due to stagnant budget allocations.

Key Points: India Infra Sector Sees Revenue Drop Despite Order Inflow Rise in Q4

  • Top-14 infra firms saw 4% YoY revenue drop due to payment delays
  • Road EPC firms hit hardest with 15% YoY decline
  • Order inflows improved with 3x book-to-bill ratio
  • Wagon makers bucked trend with 18% revenue growth
2 min read

India's infra sector faces revenue, margin pressure in Q4FY25 despite rise in order inflows: Nuvama Research

Nuvama Research reports India's infrastructure sector faced 4% YoY revenue decline in Q4FY25, with margins under pressure despite improved order inflows.

"Eroding executable order book and payment issues led to a 4% YoY contraction in aggregate Q4FY25 top line - Nuvama Research"

New Delhi, June 12

India's infrastructure sector witnessed a mixed performance in the fourth quarter of FY25, with revenues and profit margins under pressure despite improvement in order inflows, according to a report by Nuvama Research.

The report said the aggregate topline of the top-14 listed infrastructure companies contracted by 4 per cent year-on-year (YoY) in Q4FY25. This decline was mainly due to a lower executable order book and continued payment issues. However, on a sequential basis, revenues increased by 20 per cent quarter-on-quarter (QoQ).

It said "Eroding executable order book and payment issues led to a 4 per cent YoY contraction in aggregate Q4FY25 top line of top-14 listed infra companies".

The report also added that the execution by road EPC companies was severely impacted, with their topline falling 15 per cent YoY. Despite this, the overall sector decline was cushioned by relatively better performance from urban infrastructure players and NBCC.

Earnings before interest, taxes, depreciation, and amortization (EBITDA) margins of infra companies also declined during the quarter. On average, the EBITDA margin fell by 80 basis points (bp) YoY and 30bp QoQ to 10.3 per cent.

On the positive side, order inflows picked up during the quarter, resulting in the book-to-bill ratio (excluding NBCC) improving to 3x, indicating stronger project visibility ahead.

Notably, the report stated that the wagon manufacturers saw their revenues jump 18 per cent YoY in FY25, supported by a healthy 11.5 per cent EBITDA margin.

However, the report also raised concerns over the infrastructure outlook due to muted road awards for the second year in a row and no increase in the FY26 Budget allocations for roads and railways.

The report said "no increase in the budgeted outlay for roads and railways in the FY26 budget makes us cautious on Infra at large".

The report concluded the challenging operating environment, delayed payments, and budgetary constraints are likely to keep overall sentiment cautious for the infra sector in the near term.

- ANI

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Reader Comments

R
Rajesh K.
This is concerning but not surprising. The infrastructure sector has been facing payment delays for years. Government needs to clear pending bills faster to boost execution. The 20% QoQ growth shows potential, but consistent policy support is missing. #MakeInIndia
P
Priya M.
Why is railway wagon manufacturing doing well while roads struggle? Shows we're prioritizing some sectors over others. Need balanced development across all infra areas. The 3x book-to-bill ratio is promising though! 🚄
A
Amit S.
Budget constraints are worrying. Infrastructure is the backbone of our economy - can't compromise here. Hope private investment picks up where government spending is lacking. The 80bps margin drop hurts small contractors the most.
S
Sunita R.
Urban infra performing better is good news! Our cities need massive upgrades. But 15% drop in road EPC is alarming. Maybe time to revisit PPP models? The report gives both hope and concerns - typical Indian economy story 😅
V
Vikram J.
As someone in construction business, payment delays are killing us. Banks won't lend, clients won't pay on time. Government should make 45-day payment rule stricter. The sequential growth shows we can perform if systems work properly.
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Neha P.
Mixed signals everywhere! Order inflows up but margins down. Roads struggling but railways doing okay. Need more consistency in policies. The 11.5% EBITDA in wagon manufacturing shows where opportunities lie. Focus on export potential too!

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