Emerging diversified construction firms likely to witness stable growth in FY26: Crisil Ratings

Emerging diversified construction firms are expected to witness stable growth in 2025-26, with revenues projected to rise by 9-11 per cent, Crisil Ratings said on Tuesday.

Healthy order books, driven by the timely execution of projects, supporting their credentials, have resulted in the continued scale-up of operations, it said.

"Emerging diversified construction companies will continue to see steady growth this fiscal, with revenues growing 9-11 per cent compared with a 15 per cent compounded annual growth rate in the five fiscals through 2025," it said in a statement. However, limited ability to pass on the impact of sharp commodity price fluctuations and stronger competition will limit the operating margins to 10-11 per cent. While the working capital requirements of emerging construction companies will be higher on-year, it will be funded mainly by better cash flows and risk management practices, thus limiting fund-based working capital bank borrowings.

Timely execution of a sizeable order book will also entail debt-funded capex for equipment purchases. Nevertheless, strong cash flows will ensure leverage levels are under control, thereby supporting the credit profiles of companies.