EPC Sector's Growth Prospects Amidst Political Challenges

Engineering, procurement and construction companies are projected to experience mid-to-high single-digit revenue growth with stable margins this financial year. Despite a strong start to FY26 being unlikely due to past election impacts, there is potential for recovery if robust orders from transport authorities materialize.

Engineering, procurement and construction (EPC) companies are anticipated to achieve mid-to-high single-digit revenue growth coupled with largely stable margins in the current financial year, as reported by India Ratings and Research (Ind-Ra) on Monday.

Despite an undemanding base effect from FY25—when revenues fell by 4-5 percent due to prolonged election season impacts—EPC companies have sustained a revenue increase of 5 percent y-o-y in the first quarter of the present fiscal year. This marks the fifth continuous quarter of single-digit revenue growth for the sector.

However, Krishan Binani, Director of Corporate Ratings at Ind-Ra, noted that expectations for a robust start to FY26 remain unmet. Companies projected an aggregate revenue growth rate of 12.7 percent y-o-y, slightly below previous guidance. This outlook heavily relies on a potential second-half recovery fueled by a significant pipeline of projects worth Rs 3.5 trillion from the Ministry of Road Transport and Highway/National Highway Authority of India set to be awarded in FY26.