Revenue growth impacted by the early onset of monsoons; recovery expected from Q3 FY2026 onwards
Quarterly Update
30 Sep 2025
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Construction gross value added (GVA) growth slowed to
7.6% in Q1 FY2026 from 10.8% in the previous quarter, surpassing ICRA’s
estimate (+6.5% to +7.0%) for the quarter. This was mirrored by the
deceleration in YoY performance of 6 of the 9 construction-related indicators,
though, GoI’s capex improved YoY by 52% in Q1 FY2026. Overall, ICRA projects
the construction GVA to grow by 6.5-7.5% YoY in FY2026, albeit slower than the
9.4% expansion in FY2025.
The order book-to-billing ratio stood at ~3.5 times as on
June 30, 2025 (based on the operating income of FY2025), which remained at
satisfactory levels, indicating healthy revenue growth prospects over the
medium term. The OI for the sample entities remained flat in Q1 FY2026
(compared to Q1 FY2025), reflecting subdued construction activity due early
monsoons.
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Exhibit 1: Trends in capital outlay by GoI
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Source: Union Budget, GoI; ICRA Research; Actuals
for FY2019-FY2024, PE: Provisional Estimates, BE: Budget Estimates
