ICRA predicts 12-15% revenue growth for Indian construction entities in FY2025, supported by robust order book and government focus on infrastructure, with steady operating income growth and solid coverage metrics. ICRA’s Vice President, Chintan Lakhani, reported stable aggregate order book-to-sales ratio for companies in March 2024.
indicating strong medium-term revenue growth. Diversification into drinking water, metro projects, and railway station development helped sustain order books. ICRA’s construction companies’ order book has grown between 3.3x and 4.0x of operating income in five years, with transportation and building dominating, but share declining to 62% in FY2024.
Moderate steel prices supported construction earnings in FY2024, but rising prices could impact FY2025. Operating margins are stable at 11%, supported by leverage benefits. ICRA predicts a prolonged cash conversion cycle, increasing debt levels to meet working capital requirements, but operational leverage benefits will maintain interest coverage at 4.0 times in FY2025.
ICRA Projects Strong Growth for Indian Construction in FY2025
ICRA, a leading credit rating agency, has forecasted robust growth for the Indian construction sector in the financial year 2025 (FY2025). This optimistic outlook is driven by increased infrastructure investments, government policy support, and rising demand across multiple sub-sectors.
Key Growth Drivers
- Infrastructure Spending: The government’s continued emphasis on large-scale infrastructure projects, including roads, highways, railways, and urban development, is a major contributor to the sector’s expansion.
- Housing and Real Estate: A surge in residential and commercial real estate projects, supported by favorable interest rates and urbanization, is boosting construction activities.
- Public-Private Partnerships (PPP): Increased private sector participation in infrastructure projects is driving efficiency and funding.
- Technological Advancements: The adoption of modern construction techniques, digitalization, and sustainable practices is enhancing productivity and reducing project delays.
Economic and Policy Support
- The Indian government’s continued focus on flagship programs such as Bharatmala, Sagarmala, and Smart Cities Mission is fueling sectoral growth.
- Policy reforms, including faster project approvals and financial incentives, are expected to encourage investments in the construction industry.
- A stable macroeconomic environment, combined with rising domestic and foreign investments, further strengthens the outlook for FY2025.
Group Media Publication
Construction, Infrastructure and Mining
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