New Delhi, Jan 1 The Indian construction sector is projected to see 8-10 per cent revenue growth in FY27 -- marginally better than the 6-8 per cent growth anticipated for FY26, a report showed on Thursday.
ICRA also maintained a ‘Stable’ outlook on the domestic construction sector.
“Road-focused construction entities will continue to see muted performance; however, construction entities focused on urban infrastructure, irrigation and energy segment should register healthy growth,” said Suprio Banerjee, Vice President and Co-Group Head, ICRA.
The credit profile of diversified construction players is expected to benefit, while entities focused primarily on the road sector or the Jal-Jeevan mission could face challenges in the near to medium term.
According to the report, construction Gross Value Added (GVA) growth is projected to moderate to 6.5–7.5 per cent in FY26, down from the robust 9.4 per cent recorded in FY25.
Construction GVA growth had slowed to 7.2 per cent in Q2 FY26 from 7.6 per cent in Q1 but remained above 7 per cent for the 12th consecutive quarter.
As of September 30, 2025, the order book-to-billing ratio was approximately 3.7 times based on FY2025 operating income, maintaining satisfactory levels and suggesting healthy revenue growth potential in the medium term.
While competitive intensity in the construction sector remains high, operating margins are likely to remain stable at around 10.3-10.8 per cent in FY2026 and FY2027, supported by operating leverage benefits and stable commodity prices, though this is below the 11.9 per cent seen in FY2022.
“While the competitive intensity in the construction sector continues to remain high, the operating margins, supported by operating leverage benefits and stable commodity prices, are likely to keep margins stable at around 10.3-10.8 per cent in FY2026 and FY2027,” said Banerjee.
ICRA expects the cash conversion cycle to remain at levels similar to FY2025 during FY2026.
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