The report highlighted that weakness continued during the quarter due to multiple challenges, including eroding executable order books, payment issues, elongated monsoons, and construction bans, which impacted project execution and revenue growth.
It stated, “Weakness continues in Q3FY26. Eroding executable order book, payment issues, elongated monsoons and construction bans led to a 4 per cent YoY contraction… While the FY27 Budget has promised higher allocation, we remain cautious on the overall infra space”.
According to the report, the aggregate top line of the top-14 listed infrastructure companies contracted 4 per cent year-on-year in the third quarter of FY26. Profitability also declined during the quarter, with the average EBITDA margin and adjusted profit after tax (PAT) margin falling around 40 basis points year-on-year to 10.1 per cent and 5.2 per cent, respectively.
The report noted that most engineering, procurement, and construction (EPC) companies have lowered their revenue and margin guidance for FY26, reflecting continued uncertainty in the sector.
The railway segment also faced challenges during the quarter. Wagon manufacturers reported a decline in revenue, with top line decreasing 16 per cent year-on-year and 3 per cent quarter-on-quarter, mainly due to the resurfacing of wheelset availability issues.
The decline was attributed to a shrinking executable order book, ongoing payment delays, prolonged monsoon conditions, and construction bans in the National Capital Region (NCR), which affected project activity.Within the sector, road EPC companies witnessed a sharper decline, with their top line falling 7 per cent year-on-year. However, the overall decline in the sector was partially offset by better performance from building construction companies and NBCC.
While the Union Budget for FY27 has promised higher allocation towards infrastructure development, the report maintained a cautious outlook on the sector due to ongoing execution challenges and operational constraints.
Overall, the report outlined that the infrastructure sector continues to face near-term pressure on growth and profitability, despite improved order inflows and higher government allocation plans, with execution challenges remaining a key concern.