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ICRA projects muted revenue growth of 2-4% for construction sector in 2025-26

01 Apr 2026 Evaluate

Rating agency, ICRA in its latest report has projected a muted revenue growth of 2-4% for the construction sector in 2025-26, with road contractors most affected amid muted project awarding by the Ministry of Road Transport and Highways (MoRTH) and slowdown in Jal Jeevan Mission (JJM) related construction projects. The sector, which also witnessed an almost flat performance in 2024-25, is expected to recover with a revenue growth of 6-8% in 2026-27, after two bleak years, aided by healthy budgetary capex.

As per the report, the operating profitability for construction companies is likely to stay in the range of 10.3-10.8% in 2025-26, and 10.1-10.6% in 2026-27, owing to pressure on bitumen prices, driven by geopolitical tensions in West Asia, and intense competition in the sector. The report further said this is sharply lower compared to 13.0-14.0% recorded in 2020-21, reflecting stiff competition for quality projects in the flagship sectors like roads.

Suprio Banerjee, Co-group Head, Corporate Ratings, ICRA, said that diversified EPC (Engineering, Procurement, and Construction) players will continue to be better placed with expected revenue growth of 8-10% in 2026-27, compared to road-focused entities that continue to face pressure in terms of order addition and intense competition. In the last decade, several Indian entities have diversified outside India, especially in Africa and West Asia. However, owing to recent geopolitical challenges, EPC companies focused on West Asia are also expected to witness some pressure on execution momentum.

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