New Delhi: According to a recent estimate by ratings agency ICRA, revenue for companies engaged in the Indian railway sector is predicted to expand at a moderate rate of 5% in the fiscal year 2025-26 (FY26).
The expansion will be primarily driven by robust demand in the wagon manufacturing market.
According to ICRA, while wagon manufacturers are likely to expand rapidly, construction companies involved in railway-related infrastructure projects may experience sluggish development.
It stated that "revenues of organizations engaged in the Indian railway sector are predicted to grow at a moderate rate of 5% in FY2026, principally driven by substantial growth forecasts from wagon manufacturers."
Despite the weak growth prognosis, the sector's profitability is expected to remain high. The weighted average operating margin is expected to remain solid at about 12% in FY26. This will be aided by operating leverage advantages and the expectation of steady input prices.
The report emphasized the government's continuous efforts to enhance the railway sector through increased investment and reforms. Over the last few years, the Indian government has made significant investments in transportation infrastructure to cut logistical costs, shorten transit times, and improve overall connectivity.
There has also been a continual push to improve railway infrastructure, including tracks and safety standards, as well as better passenger amenities like refurbished stations and contemporary rolling stock.
This dedication is visible in the huge increase in capital outlay for Indian Railways, which has climbed by 130 percent over the last five years to Rs 2.52 lakh crore in the FY26 Budget Estimates (BE). However, the financial assistance component of this outlay increased only little (by 2%) between FY24 and FY26 BE.
According to the report, companies in Engineering, Procurement, and Construction (EPC) and wagon manufacture have witnessed a significant increase in their order books as a result of ongoing expenditures. The order book-to-income ratio for such businesses improved from 1.33 times in FY2015 to 2.77 times in FY2024.
This suggests strong revenue visibility in the medium term, giving the industry a stable outlook despite the moderate growth rate forecast for FY26.
