India’s construction industry is projected to experience a revenue growth of 6-8% in 2026-27 following two challenging years, as per a report. The sector is expected to see a subdued revenue growth of 2-4% in 2025-26, with road contractors facing increased pressure. This slowdown is attributed to shrinking order books for road contractors due to limited project awards by the Ministry of Road Transport and Highways.
The report highlights a slowdown in Jal Jeevan Mission-related construction activities contributing to the muted growth. While road-focused players may face credit profile pressure with declining margins, diversified players are likely to benefit from investments in power, urban infrastructure, and water segments. Engineering, procurement, and construction (EPC) players focusing on various sectors are anticipated to witness a healthy revenue growth of 8-10% in 2026-27.
In 2025-26, order inflows were boosted by higher awards in mining and water segments, although the recovery in road awards was gradual. The ratings agency foresees a more significant uptick in road sector awards from 2026-27 onwards. The report predicts that order inflows will expand by approximately 10% in 2026-27, driven by a recovery in road sector awards and Jal Jeevan Mission projects.
EPC companies operating in West Asia may face execution challenges due to geopolitical issues. The report estimates that operating profitability for construction firms will range from 10.3-10.8% in 2025-26 and 10.1-10.6% in 2026-27, influenced by pressure on bitumen prices. The rise in crude oil derivative prices, stemming from geopolitical tensions and sector competition, is a contributing factor to this scenario.
