Revenue Growth Slows for Road Engineering Companies

Revenue growth of road engineering, procurement and construction (EPC) companies is expected to moderate to 5-7 per cent next fiscal, primarily due to a decline in national highway project awards. However, operating profitability and strong balance sheets will help maintain stable credit profiles, according to rating agency Crisil.

Revenue growth of road engineering, procurement, and construction (EPC) companies is forecasted to decelerate to 5-7 percent next fiscal, Crisil stated on Tuesday. This slowdown is attributed to fewer national highway projects being awarded.

Despite the dip in new projects, EPC companies' credit profiles are expected to remain stable. This stability is backed by consistent operating profitability and robust balance sheets, Crisil added.

Factors such as procedural delays and strategic shifts to build-operate-transfer models contribute to the slowdown. Nonetheless, the decrease in raw material prices offers some relief, maintaining operating profitability at around 13-14 percent.

(With inputs from agencies.)