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Muted central road awards create challenges for India’s highway industry: Ind-Ra
Jan-06-2026

The rating agency -- India Ratings and Research (Ind-Ra) has said India's highway sector is facing problems, with subdued central road award activity for the past two years, leading to increased competition and persistent project execution issues. Further, it said that although state awards have come to the rescue, the sector is expected to see weak revenue growth and lower margins.

Moreover, the sector is expected to witness more build-operate-transfer (BOT) projects at both the central and state levels, which will require greater private investment. Besides, it projects the overall engineering, procurement and construction (EPC) sector to record modest year-on-year revenue growth of 6% to 8% in FY26, largely due to flat-to-negative growth in the highways sector, following a significant revenue decline in FY25.

It said margins are expected to bottom out in FY26, after decreasing about 500bp between FY21 and FY26. However, it said that working capital cycles may start to rise as the project mix shifts more toward state-level awards. Krishan Binani, Director, Corporate Ratings, Ind-Ra, said ‘The muted central award activity has altered the sector's dynamics, pushing states into the driver's seat. While this shift ensures continuity, it also introduces complexities around execution and financing.’


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