FY26 Construction Outlook - Modest Revenue Growth and Margin Recovery

India Ratings and Research (Ind-Ra) expects the Engineering, Procurement and Construction (EPC) sector to achieve revenue growth of 10%-12% yoy in FY26, following a lower 8%-10% growth rate in FY25 (FY24: 10%-12%). This will also be much weaker than the FY22-FY24 CAGR of around 20%, driven by the modest growth in central budget for FY26, a continued shift of state spending away from capex, and mixed trends on private capital spending. The EPC sector revenue growth is broadly linked to the growth in nominal gross fixed capital formation (GFCF) and construction gross value added (CGVA), which Ind-Ra expects to grow at 11.3% yoy and 12.5% yoy, respectively, for FY26 vs 7.2% yoy and 8.6% yoy for FY25.