CRISIL Sees Moderate 2–4% Growth for Construction Equipment Sector as Revenue Outlook Remains Positive

India’s construction equipment industry is expected to witness subdued volume growth over the next two financial years, according to the latest assessment by CRISIL Ratings. The agency projects that overall industry volumes will expand by only 2–4% this fiscal and the next, citing the combined impact of softening real estate activity and slower progress in road construction projects across the country.

Despite the muted demand environment, CRISIL notes that the sector’s revenue performance is likely to appear healthier. Selective price hikes undertaken by manufacturers to partially offset rising compliance and input costs are expected to push revenue growth into the 6–8% range. This pricing discipline, supported by stable steel prices and firm export realisations, is also helping cushion the pressure created by lower-priced imports. As a result, operating margins, which stood at around 12% last fiscal, are projected to contract only marginally to 11%.

The rating agency’s analysis covers 17 leading manufacturers who together account for nearly 75% of the industry’s total equipment volume. The sector’s demand is primarily driven by road development, mining activity, real estate construction, and other infrastructure segments such as railways, power and water supply. Earthmoving equipment continues to dominate the market with a 70% share, followed by material handling, concrete machinery, road equipment and processing machinery.

However, the financial performance of individual companies indicates the challenges ahead. Action Construction Equipment (ACE), one of the market leaders, reported a muted second quarter for FY26. The company’s revenue declined 2.2% to ₹773 crore, while EBITDA dropped to ₹138 crore, reflecting a margin of 17.8%. Profit after tax also fell 5.1% year-on-year to ₹90 crore. ACE’s stock has delivered negative returns of about 20% over the past year, signalling investor caution.

Industry analysts expect the sector to stabilise gradually as project execution picks up, supported by long-term infrastructure commitments from the government. However, near-term momentum will remain closely tied to the pace of real estate recovery and road construction activity.