Construction equipment revenue to grow 14-15% this FY: CRISIL report – ET Infra

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MUMBAI: The domestic construction equipment industry’s revenue is expected to increase by 14–15% this fiscal year, building on a strong base of 29% in the previous fiscal, according to the CRISIL report.

This will be driven by the government’s ongoing focus on the development of infrastructure, particularly highways, metros, and trains, including projects included in the National Infrastructure Pipeline (NIP). The real estate and mining sectors’ construction activity will also be beneficial.

Poonam Upadhyay, Director, CRISIL Ratings said, “Increased pace of road construction (accounting for 40% of construction equipment demand), augurs well for the sector’s growth.’

“Manufacturers are also seeing healthy demand from the real estate and mining sectors, and from contractors of bridges, airports and metro corridors. In addition, some amount of pre-buying of equipment is also likely towards the last quarter of this fiscal, with the sector migrating to CEV Stage-V2 emission norms from April 1, 2024, which will increase equipment prices.” Upadhyay further added.

This fiscal year, the industry should have record-breaking volume sales of 1.2 lakh units, up from 1.1 lakh units in the previous fiscal year. In the most recent fiscal year, earthmoving equipment1 made up 70% of sales volume, concrete and material handling equipment 22%, and material processing equipment the remaining 20%, the report further said

The operating margin of manufacturers of construction equipment is anticipated to increase by 100–150 basis points this fiscal year to between 10.5–11% due to improved operating leverage and a moderated price trend for raw materials (steel).

The analysis of 17 manufacturers of construction equipment, which collectively generate around 75% of the industry’s income, reveals this.

As a result of the increase in working capital borrowings being partially offset by the resulting improvement in cash accruals and moderate capital spending, “Stable” credit profiles will be the result.

  • Published On Oct 13, 2023 at 01:30 PM IST

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