New Delhi [India], August 25 : Large, diversified engineering, procurement and construction (EPC) companies are expected to see their revenues grow by 9-11 per cent this fiscal, according to a recent Crisil Ratings report. Infrastructure alone accounts for nearly three-fourths of India's total capital expenditure, underlining the critical role of these companies. In addition, some have expanded overseas to capture opportunities in diverse infrastructure sectors.
The report reviewed 15 major EPC companies with a combined revenue of Rs. 3.15 lakh crore in the last fiscal, showing that these firms remain closely dependent on government and private sector spending.
Revenue growth, which averaged nearly 20 per cent annually between fiscals 2022 and 2024, slowed to 8.3 per cent last year due to a high base effect and a six per cent rise in domestic infrastructure spending. Private sector contribution to this growth remained limited.
Gautam Shahi, director, Crisil Ratings, said, "This fiscal, the total domestic infrastructure capital outlay is expected to grow 7-9 per cent, driven by steady budgetary allocation by the central and state governments and a moderate increase in private sector participation. The share of private investments is expected to rise to 11 per cent, up from 9 per cent in the previous fiscal, driven by the government's efforts to revitalise the build-operate-transfer model in the roads sector and increasing private investments in the renewable energy sector."
The order book remains healthy with an order book-to-revenue ratio of 3.7 times as of March 2025, compared with 3.5 times a year earlier. Overseas contracts now make up 27 per cent of this pipeline, up from 23 per cent last year and nearly double the share five years ago. Such projects, typically completed faster, are helping maintain revenue momentum. Companies are also focusing on projects with credible backers, including multilateral funding agencies, to mitigate risks.
Power projects, largely transmission and distribution, have grown to 20 per cent of the order book, up from 13 per cent last year. This is expected to lift profitability due to better margins compared with roads and railways. The share of road and railway projects has dipped slightly to 30 per cent, while water projects hold steady at 27 per cent. Together, these shifts are supporting operating margins, projected to rise by about 50 basis points to 9.5 per cent this fiscal.
"Driven by steady operating performance, cash accruals should rise to double digits this fiscal and be adequate for incremental working capital, equity commitments and the moderate capex of large EPC companies. That will keep debt levels steady," said Vinit Patil, team leader, Crisil Ratings. He added that key credit metrics are projected to remain healthy, with interest coverage ratios improving from 4.5 times to around five times.