Construction Sector Entities' Revenues Poised for 12-15% Growth in FY2023-24: ICRA

India's construction sector revenue is projected to rise 12-15% this year, with margins increasing by 25-50 basis points. Government infrastructure investments will drive double-digit revenue growth through FY2025. ICRA maintains a stable outlook, citing steady income, moderate leverage, and strong coverage metrics. The industry's order book-to-sales ratio remains high, indicating healthy revenue growth prospects. Despite a slightly lower projected revenue growth in FY2025 due to a high base and reduced execution momentum, the construction sector's growth outlook remains positive.

India's construction sector entities' revenues are likely to grow by 12-15 per cent in the current financial year, while margins will expand by 25-50 bps, rating agency ICRA said on Monday.

It further said that the government's infrastructure push will result in double-digit revenue growth for the construction industry in FY2025.

The rating agency said it maintains a stable outlook on the sector with steady growth in operating income, moderate leverage, and healthy coverage metrics.

''The aggregate order book-to-sales ratio of ICRA's sample set of companies stood at around 3.9x as of December 2023 (compared to 3.4 times during March-2023), thereby indicating a healthy revenue growth prospect over the medium term,'' ICRA vice president and co-group head - corporate ratings Ashish Modani said.

He said, ICRA expects the revenue growth in FY2025 to remain healthy at 12-15 per cent on a year-on-year basis, albeit slightly lower than the 18-20 per cent revenue expansion assessed for FY2024, owing to high base and some tapering in execution momentum in Q1 FY2025 amid Parliamentary elections.

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