Mining and construction equipment industry's volume might decline in the 2025 fiscal year
Icra said that the volume of the domestic mining and construction equipment industry (MCE) may decline in the current financial year. It was reported that this has happened due to the slowdown in new project orders due to the Lok Sabha elections and the monsoon-related impact on construction activities. Apart from this, the total revenue of ICRA's sample set companies was 9-12 per cent in FY 2025.
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Rating agency Icra on Thursday said domestic mining and construction equipment industry (MCE) volumes may decline in the current financial year due to a slowdown in new project orders due to the Lok Sabha elections and monsoon-related impact on construction activities.
In a statement, the rating agency ICRA stated that it expects a 12–15% year-over-year decline in volumes in FY2025, or 1.14–1.18 lakh units.
There have been two years of strong growth—26% in FY23 and 24% in FY24—before this decline.
A halt in new project award activity in Q4 FY2024 and Q1 FY2025 will be the primary cause of this growth trend reversal since the Model Code of Conduct will be enforced during the parliamentary elections in April and May of 2024. In addition, on June 4, results will be announced.
The statement also said that apart from this, the total revenue of ICRA's sample set companies is expected to decline by 9-12 per cent and operating margin by 100-150 basis points in FY 2025.
The government's re-election pressure on project implementation has led to strong demand for the domestic mining and construction industry over the past two years.
However, amid the Lok Sabha elections and the monsoon-related impact on construction activities in Q2, there is a possibility of disruption in project award activity in two consecutive quarters – Q4FY24 and Q1FY25.
Ritu Goswami, Sector Head, Corporate Ratings, ICRA, said the first half of FY 2025 is likely to see a slowdown in sales.
