Summary

Continued government thrust on infrastructure, supported by the private sector, will keep revenue growth healthy (in early double digits) for diversified engineering procurement and construction (EPC) companies this fiscal after three consecutive years of strong growth (~20% compound annual growth rate).

The fortunes of diversified EPC companies have been linked to government capital outlay towards the infrastructure sector, a sector which is pivotal to India’s target to achieve a $5 trillion economy by fiscal 2028. The government spending continues this fiscal, as reflected in the latest interim budget wherein capital allocation to infrastructure has been enhanced, although at a slower pace due to high-base effect.

Multiple measures are also underway to boost private sector participation in the sector.

That said, in the two fiscals through 2023, diversified EPC companies saw their operating margin drop to high single digits from early double digits due to increase in raw material prices. Fiscal 2024 did see some easing in input costs. However, competition remains intense, limiting the upside for operating margin.

Balance sheets, though, remain healthy as reliance on debt is lower and growth capital comes largely from healthy internal cash accrual.

Against this backdrop, Crisil Ratings is conducting a webinar on the diversified EPC sector on June 03, 2024, where our experts will delve into:

• Overall trend of infrastructure capital expenditure (capex) growth for past five fiscals, current and next fiscal
• Break up of infrastructure capex in terms of public and private investment as well as sectoral mix
• Medium-term business outlook on key infrastructure sectors such as roads, railways, irrigation and power
• Revenue and operating margin outlook for diversified EPC companies, with an eye on the order book trend
• Expectations towards the leverage levels, key debt metrics and financial flexibility of the diversified EPC companies
  

This will be followed by a panel discussion and a Q&A session.

Do dial in.

Eminent panellists