Engineering, procurement, and construction (EPC) firms in India are expected to register a 9–11% revenue expansion in FY26, according to a recent assessment by Crisil. The growth projection is underpinned by a robust pipeline of government infrastructure projects, particularly in roads, railways, and urban development, as well as sustained capital expenditure by the private sector. Analysts highlight that improved execution capabilities, a diversified order book, and steady inflows of new contracts will help maintain momentum, although rising input costs and tight competition may temper profitability. The outlook remains broadly positive, signaling resilience in the sector.
Government Infrastructure Push
Crisil’s report underscores that India’s sustained emphasis on infrastructure investment will remain the key driver of EPC sector growth. Large-scale government initiatives such as highway expansion, metro projects, and rural connectivity programs continue to generate demand for EPC services. The steady allocation of funds in the Union Budget for infrastructure development further bolsters the sector’s prospects, ensuring a strong project pipeline for the coming fiscal year.
Private Sector Capital Expenditure
In addition to government spending, private sector capex is contributing to the demand outlook. With industries investing in capacity expansion, renewable energy projects, and logistics infrastructure, EPC firms are witnessing greater opportunities beyond public sector contracts. This diversification is expected to reduce reliance on government-led projects while strengthening long-term revenue visibility.
Order Book Strength and Execution
The report noted that most leading EPC companies are carrying forward healthy order books, translating into strong revenue assurance. Improved project management and execution capabilities, aided by digital adoption and mechanization, are enabling timely delivery and better cost controls. Analysts, however, caution that execution risks—stemming from land acquisition delays, regulatory clearances, or labor shortages—remain challenges for the sector.
Profitability and Challenges
While revenue growth looks promising, profitability could face pressure due to volatile raw material costs, particularly in steel, cement, and fuel. Competitive bidding for contracts is another factor that may squeeze margins. However, operational efficiencies, higher project volumes, and selective bidding strategies are expected to mitigate some of these risks, ensuring overall financial stability.
Outlook for FY26
Crisil projects the sector to maintain a stable credit profile as working capital management improves and leverage remains under control. Analysts anticipate that a balance of government spending, private investments, and efficient project execution will help EPC firms sustain their growth trajectory. With an expected 9–11% rise in revenue, the EPC sector is set to reinforce its role as a cornerstone of India’s economic expansion.
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