Large, diversified engineering, procurement and construction (EPC) companies are expected to see their revenue growth accelerate by 100–200 basis points (bps) to 9–10% this fiscal, supported by rising investments in the power sector, steady public infrastructure spending and expanding overseas opportunities, according to CRISIL Ratings.
The rating agency’s analysis of 14 large EPC companies, with combined revenue of more than ₹3.8 lakh crore in the previous fiscal, indicates that strong order books will provide greater revenue visibility despite emerging cost pressures.
Power-sector investments, which account for nearly one-fourth of EPC order books, are expected to increase by 15–20% this fiscal. Investments in renewable energy are expected to remain strong, while spending on thermal power is also gaining momentum amid rising baseload electricity demand.
In addition, increased investment in power transmission infrastructure to address connectivity constraints is expected to support order inflows for EPC companies.
CRISIL Ratings expects the order book-to-revenue ratio of large EPC companies to improve to around 4 times this fiscal, from approximately 3.5 times last fiscal.
“The power sector is emerging as the key swing factor for revenue growth among EPC players,” said Gautam Shahi, Senior Director, CRISIL Ratings.
Infrastructure Spending to Remain Steady
Government infrastructure spending is expected to grow by around 6–8%, broadly in line with the previous fiscal, and is likely to remain the largest contributor to EPC revenues.
Within the infrastructure segment, project approvals and payment cycles under the Jal Jeevan Mission will remain key monitorables, particularly as delays in water projects have continued.
Overseas markets are expected to provide another major growth avenue for Indian EPC companies. The Middle East accounts for around 70–75% of overseas EPC order books, with a strong pipeline across energy-transition and hydrocarbon projects.
The share of overseas orders in total EPC order books increased to around 33% as of March 2026, from approximately 28% a year earlier.
Although EPC execution in the Middle East was temporarily affected during the initial phase of the West Asia conflict, activity has largely normalised across key markets. Reconstruction opportunities following the conflict could provide additional opportunities for Indian contractors.
Despite the positive revenue outlook, EPC companies are likely to face pressure on profitability due to commodity inflation and supply-chain disruptions linked to geopolitical developments.
Prices of key inputs such as cement, steel and bitumen, along with freight and insurance costs, have increased. While index-linked price-escalation clauses offer some protection, cost pass-through remains partial across a significant portion of projects.
As a result, operating margins are expected to decline by 50–70 bps to 8.2–8.4% this fiscal. Recent rupee depreciation could, however, partly offset the pressure for companies with significant overseas operations.
Credit Profiles Expected to Remain Stable
Despite the anticipated margin compression, CRISIL Ratings expects the credit profiles of large EPC companies to remain stable, supported by higher execution, adequate cash generation, low leverage and prudent balance-sheet management.
Interest coverage is projected at 3.5–4.0 times this fiscal, broadly comparable with 3.8 times last fiscal, while total outside liabilities to tangible net worth is expected to remain stable at around 1.6–1.7 times.
CRISIL Ratings Director Ankush Tyagi said the expected margin moderation is unlikely to weaken credit profiles, given the companies’ comfortable debt metrics and balance-sheet management.
However, working capital remains a key monitorable, particularly collections from projects where receivable pressures have persisted over recent fiscals.
Subscribe to get the latest posts sent to your email.
