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Backed by strong demand because of industrial capital expenditure (capex) and government spending on infrastructure development, pre-engineered building (PEB) manufacturers in the country are likely to see revenue growth of 10-12 per cent in FY25 as well as next fiscal, a report showed on Wednesday.  

According to a Crisil Ratings report, PEB structures have emerged as the preferred choice for industrial and infrastructure buildings given the time and cost benefits they offer.

Diverse applications across sectors such as airports (hangars, terminal buildings), roads (toll plazas) and railways (yards, parts of stations) etc. will drive broad-based demand for PEB structures as increasing government outlay in infrastructure is expected to support demand.

Installation of these structures typically takes 40-50 per cent less time compared with conventional structures with significant cost savings owing to reduced steel and labour requirements.

The report mentioned that this is fuelling demand for PEB structures, along with additional benefits such as modular design and high recyclability of materials used.

According to Anand Kulkarni, Director, CRISIL Ratings, industrial capex, which accounts for around 50 per cent of the PEB demand, is expected to remain healthy over the next two fiscal years.

"Additionally, rising penetration of PEB due to cost benefits over traditional structures will also drive demand. Within the industrial sector, warehousing and logistics parks have emerged as the key segment," Kulkarni said, adding that growth will be strong over the next couple of years, backed by e-commerce and the associated expansion of logistics players.

The revenue growth of PEB players is constrained by optimal capacity utilisation, hence the industry is witnessing capacity addition. The key industries driving demand for PEB structures are industrial/manufacturing, infrastructure and real estate.

"The capacity utilisation of the PEB players stood healthy at more than 70 per cent in fiscal 2024 backed by strong demand," said Prateek Kasera, Team Leader, CRISIL Ratings.

To capitalise on demand, PEB players are incurring capex, with the industry capacity expected to grow 20 per cent by the end of the next fiscal over fiscal 2024.