As per CRISIL, the revenue growth of road engineering, procurement, and construction companies will moderate to 5-7 per cent in the 2025-26, due to a decline in national highway project awards impacting their order books. Despite this, the credit profiles of these companies are expected to remain stable, supported by consistent operating profitability and robust balance sheets. This moderation follows a compound annual growth rate of 13 per cent over the past five years.
The Ministry of Road Transport and Highways awarded an average of 12,500 km of projects between 2021-22 and 2022-23, but this dropped to 8,581 km in 2023-24, with an estimated 8,000 km length to be awarded in 2024-25. The slowdown is linked to procedural issues, election-related restrictions, and the government’s shift towards the build-operate-transfer toll model. However, lower prices for raw materials like steel and bitumen are down to 5-17 per cent from their peaks in 2023-24 and are expected to maintain operating profitability at 13-14 per cent.