Domestic construction equipment to clock 2-4% volume growth in FY26, FY27: Crisil

Crisil Ratings in its latest report, has said that the domestic construction equipment industry will continue to clock 2-4% volume growth this fiscal year and the next, amid subdued domestic demand on account of moderating real estate growth and slower road construction. However, it said revenue is expected to rise 6-8% this fiscal year and the next, driven by selective price hikes that partly offset higher compliance costs.

Firm export realisations and stable steel prices will help mitigate pricing pressure from low-cost imports, limiting the contraction in operating margin to 11% from around 12% last fiscal year. A disciplined approach to capital expenditure will keep the companies' leverage in check and credit profiles stable. It said, ‘Our analysis of 17 manufacturers, accounting for nearly three-fourths of the industry volume, indicates as much.’ Sales of construction equipment are driven by roads, mining, real estate, and other sectors such as railways, water supply and power.

In terms of product mix, earthmoving machinery accounts for 70% of volume, with material handling 12%, concrete equipment 10%, road equipment 5%, and material processing equipment 2% making up the rest. In FY25, domestic sales accounted for 90% of total construction equipment volume, and exports for the rest.

Meanwhile, construction equipment companies like Action Construction Equipment, which hold a dominating market share in the industry, reported muted growth in the Q2FY26. In Q2FY26 company’s revenue declined by 2.2% to ₹773 crore. Consequently, EBITDA margin also dropped by 3.1% to ₹138 crore, and the EBITDA margin stood at 17.8%. Similarly, the profit after tax also dropped 5.1% YoY to ₹90 crore for the quarter. The shares have delivered negative returns of 20% in the past year.