EPC firms may post mid-to-high single-digit revenue growth in FY26: Ind-Ra

Engineering, procurement and construction companies could see mid-to-high single-digit revenue growth and largely stable margins, with some upside, in the ongoing financial year, India Ratings and Research (Ind-Ra) said on Monday.

This is despite the undemanding base effect of FY25 when revenue slumped 4-5 per cent year-on-year with the absolute sector EBITDA remaining largely flat, hit by the busy election season.

The EPC sector across 22 listed entities delivered revenue growth of 5 per cent y-o-y in the first quarter of the current fiscal year, marking the fifth consecutive quarter of single-digit revenue growth.

"The hopes of strong start to FY26 by the EPC sector have not materialised, despite an undemanding base of the past year, hit by the election impact. Guidance by the companies suggests aggregate revenue growth of 12.7 per cent year-on-year, around 100bp lower than the earlier guidance.

"This is susceptible to further downside as the companies' guidance heavily relies on the hopes of a second-half recovery and assumption of robust order flows from the Ministry of Road Transport and Highway/National Highway Authority of India, after the recent announcement of a project-wise pipeline worth Rs 3.5 trillion, to be awarded in FY26," Krishan Binani, Director, Corporate Ratings, Ind-Ra said.

According to Ind-Ra estimates, EPC firms are expected to see mid-to-high single-digit revenue growth and largely stable margins, with some upsides during FY26.

"Margin recovery hopes have also receded with aggregate guidance suggesting a 20bps improvement at 10.8 per cent in FY26 versus the past quarter's assumption of 11 per cent. Central and state capex is likely to grow faster in FY26 with a lean election season, yet the overall sentiment for fresh investments remains muted, given the uncertain policy environment," Binani added.