New Delhi, Jan 1 (NationPress) The Indian construction industry is forecasted to achieve a revenue growth of 8-10% in FY27, which is a slight improvement from the 6-8% growth projected for FY26, according to a report released on Thursday.

ICRA has also affirmed a ‘Stable’ outlook for the domestic construction industry.

“Companies focusing on road construction may experience subdued performance; however, those concentrating on urban infrastructure, irrigation, and the energy sector are expected to witness robust growth,” remarked Suprio Banerjee, Vice President and Co-Group Head at ICRA.

The credit profiles of diversified construction companies are anticipated to improve, while those primarily engaged in the road sector or the Jal-Jeevan mission may encounter challenges in the near to medium term.

The report indicates that the construction Gross Value Added (GVA) growth is expected to decrease to 6.5–7.5% in FY26, down from an impressive 9.4% recorded in FY25.

Construction GVA growth slowed to 7.2% in Q2 FY26, a slight drop from 7.6% in Q1, but it has remained above 7% for the 12th consecutive quarter.

As of September 30, 2025, the order book-to-billing ratio stood at approximately 3.7 times based on FY2025 operating income, indicating satisfactory levels and suggesting substantial revenue growth potential for the medium term.

Despite high competitive intensity in the construction sector, operating margins are expected to stay stable at around 10.3-10.8% in FY26 and FY27, supported by operating leverage and stable commodity prices, albeit lower than the 11.9% seen in FY2022.

“Although competitive intensity remains high, operating margins, bolstered by operating leverage benefits and stable commodity prices, are likely to maintain stability at around 10.3-10.8% in FY26 and FY27,” stated Banerjee.

ICRA anticipates that the cash conversion cycle will remain consistent with levels observed in FY2025 throughout FY2026.