Infrastructure

EPC Sector Revenue Grows 2% in Q1 FY27 as H2 Execution Holds Key

  • by- Zaid
  • Aug 31, 2026
India's EPC sector grew 2% in Q1 FY27, while EBITDA margin fell to 9.5%. Ind-Ra expects recovery to depend on stronger H2 execution and working-capital improvement.
EPC Sector Revenue Grows 2% in Q1 FY27 as H2 Execution Holds Key

NEW DELHI, August 31, 2026: India's engineering, procurement and construction (EPC) sector recorded only 2% year-on-year revenue growth in Q1 FY27, with India Ratings and Research (Ind-Ra) saying a stronger recovery will depend on improved execution in the second half of the financial year.

Ind-Ra expects EPC companies to deliver mid-to-high single-digit revenue growth in FY27, while margins are likely to remain broadly stable.


Order Books Grow Faster Than Revenue

The sector's order book increased 18% year-on-year in Q1 FY27, taking order-book cover to 3.1 times, compared with 2.7 times in Q1 FY26.

Power and transmission and distribution, metro, marine and overseas markets supported order inflows. Private-sector projects also gained ground, with their share of the sector order book rising to 40% in Q1 FY27.


Margins Fall to Multi-Quarter Low

Despite stronger order inflows, EBITDA margin declined to 9.5%, a multi-quarter low.

Ind-Ra attributed the pressure to execution bottlenecks, higher input and labour costs, competitive intensity, incomplete cost pass-through and fixed-price contracts.

Companies are guiding for margins of around 10.2-10.3% for FY27, implying an improvement in the coming quarters.

 


Road and Water Projects Remain Under Pressure

Performance differed significantly across segments. Buildings and factories companies recorded 15% revenue growth, while power and T&D companies grew 7%.

Road-focused companies, however, saw revenue decline 4%, continuing the weakness witnessed since FY25. Payment delays in water projects, labour shortages and supply-chain disruptions also affected execution.


Working Capital Remains a Key Risk

The sector's working-capital cycle has lengthened, while EBITDA-to-cash-flow conversion fell to around 30%, compared with the historical 55-65% range through FY24.

Ind-Ra expects some improvement by the end of FY27 as payments in water and metro projects unlock.

 


Infrastructure Pipeline Supports Recovery Outlook

The highways sector has received policy support, including a revised BOT toll model and a project pipeline exceeding ₹4 lakh crore. Changes allowing institutional investors to participate directly in BOT bidding could also support project activity.

The railways sector is meanwhile exploring private capital for the proposed ₹2.8 lakh crore East-West Dedicated Freight Corridor through the hybrid annuity model.


Why It Matters for Real Estate and Infrastructure

A stronger EPC sector could accelerate the execution of roads, metro systems, power networks, industrial projects and other urban infrastructure. Faster project completion can improve connectivity and support development around emerging residential and commercial corridors.