Road projects to boost domestic construction equipment players' revenues

• Road construction accounts for 40% of the demand for construction equipment.
• Some pre-buying of equipment is also likely towards the last quarter of this fiscal, says a Crisil Ratings report.Government focus on infrastructure build-out, especially roads, metros, and railways a key.

The revenue for the domestic construction equipment sector is expected to grow by 14-15% in FY24 on the back of the government's focus on infrastructure, as per a Crisil Ratings report. Construction activity across the real estate and mining sectors will also play a supportive role.

The revenue for the domestic construction equipment sector is likely to grow this fiscal on a high base of 29% in the previous fiscal. "This will be driven by continued government focus on infrastructure build-out, especially roads, metros, and railways, including projects under the National Infrastructure Pipeline (NIP)," the report reads.

The increased pace of road construction, which accounts for 40% of the demand for construction equipment, augurs well for the sector's growth. Manufacturers are also witnessing robust demand from the real estate and mining sectors, as well as from contractors of bridge, airport, and metro corridor, said Poonam Upadhyay, Crisil Ratings Director.

"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 added.

In volume terms, the sector is projected to achieve all-time high sales of 1.2 lakh units this fiscal, compared to 1.1 lakh units in FY23.

Earthmoving equipment accounted for 70% of sales volume last fiscal, material handling and concrete equipment 22%, while material processing equipment comprised the rest, the report said.

(With text input from PTI)