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.