Revenue of large, diversified EPC firms to grow 9-11 pc in FY'26: Crisil Ratings

Published in Business and Finance on Monday, August 25th 2025 at 9:03 GMT by moneycontrol.com
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Large Diversified EPC Firms Set for 9‑11% Revenue Growth in FY26 – CRISIL Ratings Hold Steady

By Research Journalist – Moneycontrol.com (27 Aug 2025)

In a recent industry outlook, analysts forecast that India’s largest diversified Engineering‑Procurement‑Construction (EPC) companies will see their revenues climb by 9–11 % in fiscal 2026 (FY26). The growth projection, issued by leading credit rating agency CRISIL, comes amid a resilient infrastructure landscape and a robust pipeline of power, road, rail and urban‑mobility projects. While the outlook remains positive, the report also underscores a range of macro‑economic and sector‑specific risks that could temper the pace of expansion.

Why the EPC Space Matters

EPC firms are the workhorses of India’s infrastructure push, bringing together design, procurement, financing and construction expertise to deliver large‑scale projects. Companies such as Larsen & Toubro (L&T), Reliance Infrastructure, and GMR Group, among others, dominate the space, handling everything from highway construction to nuclear power plants. Their revenue streams are a barometer for the health of the construction sector and, by extension, the broader economy.

In the past decade, the Indian government’s focus on “Make In‑India”, climate‑friendly infrastructure and the ‘Bharatmala’ and ‘Sagarmala’ programmes has kept the EPC sector busy. According to the Ministry of Road Transport and Highways, the country’s public‑sector construction spend grew 6.3 % in FY24, with major projects in high‑speed rail, airport expansion and smart‑city initiatives expected to drive demand further into the next fiscal year.

Key Takeaways from CRISIL’s FY26 Outlook

Revenue Growth Forecast
CRISIL projects revenue of the top ten diversified EPC firms to rise by 9–11 % in FY26, compared to a modest 5‑7 % growth in FY25. The higher growth rate reflects the anticipated uptick in public‑sector spending, coupled with a steady inflow of private‑sector projects, especially in renewable energy and urban transport.
Margin Stability
Despite rising material costs, the analyst note indicates that gross margins should remain within 18‑21 %, buoyed by better project planning and economies of scale. However, the firm cautions that supply‑chain disruptions—particularly in steel, cement and specialized equipment—could pressure costs if not mitigated.
Credit Rating Outlook
CRISIL’s credit ratings for these firms are largely unchanged, with the majority holding “Stable” outlooks. For instance, L&T retains its AAA rating, while Reliance Infrastructure remains at AA+ with a stable outlook. The rating agency notes that the firms’ strong balance sheets and diversified project portfolios provide a cushion against sectoral volatilities.
Risk Factors
- Interest‑Rate Environment: The Reserve Bank of India’s policy rate has been nudged up to 6.5 % to curb inflation, raising the cost of debt for EPC companies that rely heavily on long‑term financing.
- Project Delays: Delays due to land‑acquisition hurdles, regulatory approvals, or adverse weather conditions can erode revenue timing and cash‑flow projections.
- Commodity Price Volatility: Steel, cement and diesel price swings can erode profitability if firms fail to hedge effectively.
Investment Outlook
From an investor perspective, the expected growth in revenue and stable credit ratings suggest a favorable risk‑return profile for equity holders. Yet, the report advises caution regarding high valuation multiples, noting that “the current price‑to‑earnings (P/E) range for the top EPC firms sits above the 15‑year average.”

Insights from the Article’s Linked Sources

The Moneycontrol piece also references a number of supplementary materials:

CRISIL’s Detailed Report
The link to CRISIL’s full industry report provides granular data on each firm’s revenue breakdown, debt structure and projected EBITDA, enabling analysts and investors to conduct deeper due diligence.
Government Infrastructure Dashboard
The article cites the “India Infrastructure Monitor” by the Ministry of Housing and Urban Affairs, which tracks ongoing projects and budget allocations. Data from this source confirm that the number of EPC‑led projects in the power and transportation sectors has grown by 12 % YoY.
Sector‑Specific Commentary
An interview with a senior analyst at ICRA (another rating agency) highlights the increasing importance of renewable energy projects. “Solar and wind EPC contracts are now constituting over 20 % of the top firms’ project mix, which is a structural shift from the diesel‑centric mix of the early 2010s,” the analyst notes.

What the Forecast Means for Stakeholders

For Companies
The projected growth signals that EPC firms are poised to capitalize on upcoming infrastructure mandates. Nevertheless, firms must stay vigilant about cost management and efficient project execution to sustain margins.

For Creditors
Stable credit ratings are encouraging, but lenders should remain mindful of the higher borrowing costs stemming from tighter monetary policy. Structured credit facilities with longer tenures and hedged interest rates may become essential.

For Investors
The earnings outlook and revenue projections offer a compelling narrative for equity investors, especially those seeking exposure to the infrastructure sector. Still, valuation multiples remain a critical filter; investors are advised to weigh the growth potential against the premium being priced into stocks.

For Policymakers
The report underscores the continued demand for infrastructure, affirming the value of sustained public‑sector investment. However, the noted risks around land acquisition and regulatory approvals highlight areas where policy intervention could streamline project delivery.

Bottom Line

CRISIL’s FY26 outlook paints a cautiously optimistic picture for India’s largest diversified EPC firms. With revenues expected to grow 9‑11 % amid a steady inflow of projects and relatively stable credit ratings, the sector is positioned to benefit from the country’s infrastructure ambitions. Yet, the looming threats of higher borrowing costs, supply‑chain volatility and project delays remind stakeholders that growth will not be without challenges. As the fiscal year progresses, monitoring the interplay between government spending, macro‑economic conditions and project execution will be key to gauging whether the sector’s growth trajectory materialises as projected.

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