EPC Firms Poised for 11% Fiscal Growth, Backed by Infrastructure Expansion

Large EPC companies in India are predicted to see 9-11% growth this fiscal year as infrastructure investments surge. Despite a slowdown last year, steady government budgets and increased private participation are boosting growth. Overseas projects and power initiatives are also enhancing profitability.

A recent report by Crisil Ratings forecasts revenue growth of 9-11% for large, diversified engineering, procurement and construction (EPC) companies in the current fiscal year. These companies are critical to India's infrastructure sector, which accounts for nearly three-fourths of the nation's capital expenditure.

The analysis covered 15 major EPC companies with a combined revenue of Rs. 3.15 lakh crore in the previous fiscal year. It highlighted a slowdown in revenue growth to 8.3% last year from almost 20% annually between 2022 and 2024. The slowdown was attributed to a high base effect and a 6% rise in domestic infrastructure spending, with limited contributions from the private sector.

According to Gautam Shahi, Director at Crisil Ratings, domestic infrastructure capital outlays are expected to increase 7-9% this fiscal, supported by consistent budgetary allocations and a moderate rise in private investment. Overseas projects now constitute 27% of order books, and the focus is shifting towards power projects, enhancing profitability with better margins. Key financial metrics, such as interest coverage ratios, are projected to remain healthy.

(With inputs from agencies.)