Mumbai, Sept. 2 -- Rising power sector investments, steady public infrastructure spending, and expanding overseas contracts will drive EPC revenue growth this fiscal.

Large, diversified engineering, procurement and construction (EPC) companies with revenue above Rs.10 billion and presence across multiple infrastructure segments are set to post a 100-200 basis-point (bps) increase in revenue growth to 9-10 per cent this fiscal, according to Crisil Ratings. The credit ratings agency said this will be driven by rising power-sector investments, steady public infrastructure spending, and expanding overseas opportunities that continue to strengthen already healthy order books.

While profitability may soften due to commodity inflation and supply-chain disruptions linked to geopolitical developments, low leverage and comfortable debt-protection metrics are expected to keep credit profiles stable.

Crisil's analysis of 14 large EPC companies, with combined revenue of over Rs.3.8 trillion last fiscal, shows strong diversification across power, roads, railways, irrigation and water supply, airports, ports, urban development, telecom towers, warehousing, green hydrogen, and charging infrastructure.

Gautam Shahi, Senior Director, Crisil Ratings, said, "The power sector is emerging as the key swing factor for revenue growth among EPC players. The order book-to-revenue ratio of large EPC companies is expected to improve to around 4.0 times this fiscal from 3.5 times last fiscal, driven by accelerating investments in both generation and transmission. This should translate into a stronger executable order pipeline, better revenue visibility and a more sustained growth runway, further supported by select overseas opportunities."

Power-sector investments, which account for nearly a quarter of EPC order books, are expected to grow 15-20 per cent this fiscal. Capital expenditure in renewables will remain robust, while thermal power investments are reviving to meet rising baseload demand. Increased spending on transmission infrastructure to address connectivity bottlenecks will provide an additional boost, making power the primary growth driver for EPC companies this year.

Government infrastructure spending is expected to rise steadily by 6-8 per cent, broadly in line with last fiscal, and remain the largest contributor to EPC revenues. Approval timelines and payment cycles for water projects under the Jal Jeevan Mission will remain a key monitorable.

Global Order Expansion

Overseas markets will provide the third pillar of growth. The Middle East, which accounts for 70-75 per cent of overseas order books, has a strong project pipeline across energy-transition and hydrocarbon sectors. Large Indian EPC companies are well placed to benefit, given their execution track record, cost competitiveness, and longstanding client relationships. Overseas orders rose to 33 per cent of total order books as of March 2026, up from 28 per cent a year earlier.

Execution in the Middle East was briefly affected during the initial phase of the West Asia conflict but has since normalised. Reconstruction opportunities emerging in its aftermath could further support regional expansion.

At the same time, geopolitical developments are intensifying cost pressures through higher prices of cement, steel, bitumen, freight, and insurance. Material costs typically form 55-60 per cent of total EPC expenditure. While index-linked escalation clauses provide partial protection, margins are expected to moderate by 50-70 bps to 8.2-8.4 per cent this fiscal. Recent rupee depreciation could partly offset the pressure for companies with significant overseas exposure.

Ankush Tyagi, Director, Crisil Ratings, said, "The anticipated margin moderation is unlikely to weaken credit profiles. Higher execution, adequate cash generation and prudent balance-sheet management should keep debt metrics comfortable. Interest coverage is expected at 3.5-4.0 times this fiscal, broadly in line with 3.8 times last fiscal, while total outside liabilities to tangible net worth will remain stable at 1.6-1.7 times."

Working capital will remain a key monitorable, particularly collections from projects where receivable pressures have persisted.

Published by HT Digital Content Services with permission from Infrastructure Today.