India's emerging diversified construction firms' revenues to grow 9-11 pc this fiscal

New Delhi, June 3 (IANS) India’s emerging diversified construction companies are expected to see steady growth in the current fiscal, with revenues likely to rise by 9–11 per cent, a new report said on Tuesday.

This follows a strong run over the past five years, during which these companies saw an average annual revenue growth of around 15 per cent, according to data compiled by Crisil Ratings.

Rahul Guha, Senior Director at Crisil Ratings, noted that government focus on infrastructure and improved access to funding are supporting the sector’s growth.

“Diversity in order books should enable these players to log another year of steady revenue growth,” he said.

However, profitability will remain flat on-year as competition within the segment intensifies, Guha added.

Himank Sharma, Director at Crisil Ratings, added that although these companies are investing in equipment and facing higher working capital needs, their balance sheets remain strong and credit profiles stable.

The growth is being driven by a healthy pipeline of projects and the timely execution of orders, which has helped companies build a solid track record and expand their operations.

An analysis of around 200 such companies, which together earned about Rs 1 lakh crore last fiscal --roughly 10 per cent of India’s total infrastructure spend -- shows the sector remains on a stable footing.

The order books of these companies remain strong, with a backlog that is about twice the size of their expected revenues for fiscal 2025.

These orders are spread across multiple sectors, including civil construction and urban infrastructure (40 per cent), roads (34 per cent), railways (12 per cent), and water projects (10 per cent).

This diversification is helping companies reduce their reliance on any one sector, especially at a time when new road project awards have slowed, the report said.

In the roads sector, companies have increased their presence in both engineering, procurement and construction (EPC) and hybrid annuity model (HAM) projects over the last two years.

At the same time, more government spending on railways, buildings, and urban development projects has provided fresh growth opportunities and helped balance their project portfolios.

--IANS

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