Key Points

The fortunes of these companies are closely tied to the Capex outlays of both government and private sector entities, and infrastructure Capex alone accounts for over 75 per cent of India's total Capex, Crisil Ratings said in its report.

"This fiscal, the total domestic infrastructure capital outlay is expected to grow 7-9 per cent, driven by steady budgetary allocation by the central and state governments and a moderate increase in private sector participation," said Gautam Shahi, Director, Crisil Ratings.

The share of private investments is expected to rise to 11 per cent, up from 9 per cent in the previous fiscal, driven by the government's efforts to revitalise the build-operate-transfer model in the roads sector and increasing private investments in the renewable energy sector, Shahi added.

A few EPC companies have also expanded overseas to tap opportunities in diverse infrastructure sectors.

After clocking a Compound Annual Growth Rate (CAGR) of 20 per cent over fiscals 2022-2024, revenue growth normalised last fiscal to 8.3 per cent on a high base, in line with the 6 per cent growth in domestic infrastructure Capex, the report stated.

The order book position of EPC companies remains healthy, with the order book to revenue ratio at 3.7 times as of March 2025 (3.5 times a year ago).

"There has been a shift in the composition of the order book, with the share of overseas orders rising to 27 per cent as of March 2025 from 23 per cent a year ago. In fact, the share used to be much lower at 16 per cent five years ago," the report highlighted.

Shorter timelines for overseas projects can mean faster execution that, in turn, helps maintain the pace of revenue growth for companies. To manage risks associated with such projects, companies are prioritising projects with strong counterparties or those backed by reputed multilateral funding agencies.

From a sectoral perspective, the share of power projects -- primarily transmission and distribution -- in the overall order book has risen to 20 per cent as of March 2025 from 13 per cent a year ago and is expected to support operating profitability due to higher margins, compared with roads and railways.

Vinit Patil, Team Leader, Crisil Ratings, said, "Driven by steady operating performance, cash accruals should rise to double digits this fiscal and be adequate for incremental working capital, equity commitments and the moderate Capex of large EPC companies."

The study was done on 15 EPC companies, accounting for Rs 3.15 lakh crore of annual revenue last fiscal.

- IANS