Advertisement
When should a housing society in Mumbai start considering re...
From GST on JDAs to SEBI’s REIT reclassification and the S...
Stay ahead in the world of real estate with our daily podcas...
Stay ahead in the world of real estate with our daily podcas...
In FY2025, India's construction industry anticipates robust growth, following a stellar FY2024. With the government's commitment to infrastructure evident in increased capital expenditure, ICRA maintains a stable outlook, projecting moderate margin expansion despite competition challenges. While profitability may remain below pre-Covid levels due to the expiration of certain schemes, the moderation in commodity prices, notably steel, offers relief. Stakeholders must navigate challenges with vigilance, leveraging opportunities as they arise. Monitoring market dynamics and policy shifts will be crucial for success in the upcoming fiscal year.
In the upcoming fiscal year of FY2025, the construction industry in India is anticipated to maintain its robust revenue growth trajectory, with projections indicating a substantial year-on-year increase ranging between 12% to 15%. This positive forecast follows a remarkable surge observed in FY2024, where revenue witnessed an impressive 18% to 20% growth rate. Such buoyancy in growth prospects is intricately linked to the unwavering commitment of the government towards bolstering infrastructure development. This commitment is palpable in the significant surge in capital expenditure allocations, soaring to INR 11.1 trillion in the FY2025 budget estimates, marking a notable 16.9% year-on-year increase. Advertisement
ICRA, in its comprehensive assessment, has upheld a stable outlook for the sector, foreseeing a sustained rise in operating income coupled with moderate leverage and robust coverage metrics. Moreover, the forthcoming fiscal year is poised to witness a modest expansion in operating margins, projected to increase by 25 to 50 basis points, reaching an encouraging range of 11.5% to 12.0%. This anticipated growth in margins can be primarily attributed to the accruing benefits from operational leverage and the optimistic expectation of relatively stable commodity prices.
Nevertheless, amidst these promising prospects, it's imperative to acknowledge the persisting challenges entrenched within certain segments of the construction sector, prominently marked by intense competition dynamics. Consequently, the overall profitability outlook is forecasted to hover below pre-Covid levels (14%+) in the medium term. Furthermore, the imminent increase in the working capital requirement anticipated in FY2025 is a direct repercussion of the expiration of the Atmanirbhar Bharat scheme.
However, amidst these challenges, a glimmer of hope emanates from the observed moderation in prices witnessed in key commodities during FY2024, with steel being a prominent example. This moderation in commodity prices not only offers a degree of relief to industry participants but also augurs well for the overall growth prospects of the construction sector.
In summary, the construction industry in India is poised for continued growth in FY2025, propelled by proactive government initiatives and favourable market conditions. While challenges persist, stakeholders are expected to navigate through them adeptly, leveraging emerging opportunities while remaining vigilant to mitigate potential risks. As the fiscal year unfolds, a vigilant monitoring of market dynamics and policy shifts will be imperative for stakeholders to effectively capitalise on emerging opportunities and fortify against potential challenges.
5th Jun, 2025
25th May, 2023
11th May, 2023
27th Apr, 2023
Advertisement
Facebook
Whatsapp
