Activity across infrastructure sectors in the third quarter of 2025-26 (Q3FY26) was slow due to underperformance in roads. Slow road awards have led to most engineering, procurement, and construction (EPC) companies lowering revenue and margin guidance for FY26. But activity is expected to pick up in Q4FY26. The Budget FY27 indicates that the Centre will continue to support infrastructure buildout.
In Q3FY26, road companies reported aggregated operating profit margin of 11.5 per cent, lower than consensus, due to higher costs and slow execution. Competitive intensity in road EPC has also increased, resulting in margin compression.
The National Highways Authority of India (NHAI) may miss its FY26 award targets. As of mid-January 2026, 1,135 km has been awarded by NHAI against the FY26 target of 6,376 km. NHAI has built 3,551 km of national highways from April 2025 to mid-January 2026, against a target of 6,000 km. NHAI exceeded its target of 5,150 km in FY25, building 5,614 km.
