New Delhi, 1 January: India’s construction sector is expected to see an income growth of 8 to 10 percent in the financial year 2026-27. This projection is slightly better than the estimated 6 to 8 percent growth forecast for FY 2026, according to a report released by rating agency ICRA on Thursday.
ICRA has maintained a ‘stable’ outlook for the Indian construction industry, indicating that the sector is likely to remain balanced in the near future.
Suprio Banerjee, Vice President and Co-Group Head at ICRA, noted that construction companies working primarily on road projects may experience some weakness in performance. In contrast, firms engaged in urban infrastructure, irrigation projects, and the energy sector are expected to record healthy growth.
The report highlights that companies operating across multiple segments are likely to have stronger financial health. However, those relying solely on road construction or the Jal Jeevan Mission may face challenges in the near term.
The total economic growth (GVA) of the construction sector is projected to decline to 6.5 to 7.5 percent in FY 2026, down from 9.4 percent in FY 2025.
Growth in the construction sector stood at 7.2 percent in the second quarter of FY 2026, slightly lower than 7.6 percent in the first quarter. Nevertheless, this marks the twelfth consecutive quarter of growth above 7 percent.
As of 30 September 2025, the order book-to-billing ratio based on operating income for FY 2025 remained at a satisfactory level of approximately 3.7 times. This suggests that companies are likely to see increased income in the coming period.
Despite intense competition in the sector, profit margins are expected to remain stable, ranging between 10.3 and 10.8 percent during FY 2026 and FY 2027. This stability is attributed to steady raw material prices and improved project management.
ICRA also believes that cash flow management by construction companies will remain consistent in FY 2026, similar to FY 2025.
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My name is Bhupendra Singh Chundawat. I am an experienced content writer with several years of expertise in the field. Currently, I contribute to Daily Kiran, creating engaging and informative content across a variety of categories including technology, health, travel, education, and automobiles. My goal is to deliver accurate, insightful, and captivating information through my words to help readers stay informed and empowered.
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