Indian EPC Firms Set for 9-10% Revenue Growth in FY27 as Power Investments Surge, Margins Squeezed

The Quick Take

• Crisil forecasts 9-10% revenue growth for large Indian EPC firms in FY27 on power and overseas orders
• Power infrastructure investments surge as India ramps electrification — but margins may compress
• Higher material, freight, and insurance costs are the margin headwind offsetting strong order inflow

Credit rating agency Crisil expects large engineering, procurement, and construction companies in India to post revenue growth of 9-10% in the current fiscal year, driven by the surge in power infrastructure investment and expanding overseas project orders. The power sector is emerging as the dominant revenue driver for India's EPC industry, as the government's 500 GW renewable energy target by 2030 and the associated grid modernization program generate a sustained pipeline of high-value contracts for transmission, substation, and solar project construction.

The margin outlook is more nuanced than the revenue picture. Crisil flags that higher material costs — particularly steel, copper, and aluminum, all of which are sensitive to global commodity cycles — combined with elevated freight costs from shipping rate volatility and rising insurance premiums on overseas projects, are compressing operating margins even as top-line growth accelerates. This margin headwind creates a bifurcation between well-hedged large EPC players like L&T, KEC International, and Kalpataru Power Transmission, which have multi-year fixed-price contract buffers, and smaller operators facing raw pass-through exposure.

The key forward signal is the pace of state electricity board capital expenditure approvals and disbursements, which historically lag central government announcements by 12-18 months and create lumpy order booking patterns for EPC companies. If Q2 FY27 order inflow data from L&T and KEC shows acceleration above the 9-10% revenue baseline, the sector is entering an upcycle that could sustain 12-15% revenue growth in FY28. The macro variable is the global copper price trajectory, which determines input cost pressure intensity for EPC firms executing high-voltage transmission projects where copper content is the largest single material cost.

Synthesized from 1 source.