Investments in Renewables, Roads, and Real Estate Set to Reach Rs 17.5L Cr by FY26-27: Crisil
Crisil Ratings forecasts that investments in renewable energy, roads, and real estate sectors will surge to Rs 17.5 lakh crore over FY26 and FY27, driven by hybrid energy capacities, road monetisation, and premium residential projects.
Renewable EnergyReal EstateRoadsInvestmentCrisil RatingsReal Estate NewsJun 09, 2025
What remains constant across these three sectors is the strong investment growth. Over this fiscal and next, investments may rise at around 15% annually, reaching around Rs 17.5 lakh crore compared with around Rs 13.3 lakh crore in the preceding two fiscals, according to Krishan Sitaraman, Chief Ratings Officer, Crisil Ratings.
In the renewable energy sector, there is a transition towards hybrid or storage-backed capacities to address the intermittency of power supply. This facilitates scheduling of power round-the-clock with greater confidence. The country expects to add 75 GW capacity in this and the next fiscal, of which hybrids will account for approximately 37%. This is a significant jump, considering hybrids accounted for around 14% of the capacity additions over the preceding two fiscals.
In the roads sector, which has a significant multiplier effect on the economy, a pick-up in project awarding will be crucial to revitalise the sector’s growth. For the National Highways Authority of India (NHAI) to reach its previous highs of around 6,000 km per year of awards and execution, a substantial rise in private capital through acceleration in asset monetisation will be essential. Crisil expects the share of monetisation in NHAI’s sources of funds to grow to around 18% in this fiscal and next, compared with 14% in the preceding two fiscal years. The agency notes that a monetisable asset base worth Rs 3.5-4 lakh crore lends confidence to this projection.
In real estate, the residential segment is seeing demand normalise after rapid recovery following the pandemic. Crisil expects revenue growth for developers to remain steady at 10-12% this fiscal and next. With volume growth slated to rationalise, realisations will be supported by continuing demand for premium projects. Commercial real estate, too, will see steady net leasing growth of 7-9% this fiscal and next. As India continues to remain a cost-efficient market for GCCs and domestic sectors grow at a steady pace, annual net leasing demand is poised to cross 50 million square feet by FY27.
However, these sectors face a set of evolving challenges. In renewables, timely availability of evacuation infrastructure is critical. A significant ramp-up in transmission capacity is underway with a total capital expenditure (capex) of around Rs 1 lakh crore in this fiscal and next, twice of what was seen in the preceding two fiscals. These projects may face delays on account of right-of-way issues, delayed approvals, or short supply of equipment such as transformers and high-voltage direct current components. Further, as renewable capacities typically take much less time to be set up, transmission capacity may fall short temporarily.
In roads, monetisation has been a mixed bag in the past, with around 35% of the total toll-operate-transfer bundles floated not being awarded. Possible delays in monetisation on account of approvals or mismatches in valuations can lead to a slowdown in sectoral growth. In residential real estate, new launches outpacing demand could ratchet up inventory levels. Crisil expects inventory to inch up to 2.9-3.1 years this fiscal after achieving a low of 2.7 years in FY24, which may increase the debt of some developers.
For all these sectors, geopolitical risks and their impact on investments in India will bear watching. While such risks can pose growth challenges, the credit risk profiles are likely to be resilient across the renewables, roads, and real estate sectors. Robust operating performance over the past few fiscals and the consequent strong cash flows have kept debt levels under control. Healthy investor interest, as evident from equity raise as well as asset monetisation, has enabled significant deleveraging of balance sheets. Cumulatively, around Rs 2.1 lakh crore of equity capital has been deployed in these sectors over the past two fiscals, driven by strong investor participation, supporting the credit profiles of developers and projects.
The emergence of infrastructure investment trusts and real estate investment trusts have also played a crucial role in strengthening credit profiles given their structural benefits such as pooling of cash flows, cap on leverage, and strong regulatory guardrails, according to the agency. All in all, while investment growth in these three sectors may see some moderation if the risks play out materially, steady cash flows and healthy balance sheets should keep credit profiles resilient.
Frequently Asked Questions
What is the projected investment growth in the renewable energy, roads, and real estate sectors?
Crisil Ratings forecasts that investments in these sectors will grow by around 15% annually, reaching Rs 17.5 lakh crore over FY26 and FY27.
What is the focus in the renewable energy sector?
The focus is on the transition towards hybrid or storage-backed capacities to address the intermittency of power supply and facilitate round-the-clock power scheduling.
What is the role of monetisation in the roads sector?
Monetisation is crucial for the roads sector to reach its previous highs of around 6,000 km per year of awards and execution. Crisil expects the share of monetisation in NHAI’s sources of funds to grow to around 18% in this fiscal and next.
What challenges do these sectors face?
Challenges include timely availability of evacuation infrastructure in renewables, delays in monetisation in roads, and potential inventory buildup in residential real estate.
How are credit profiles expected to remain resilient despite these challenges?
Robust operating performance, strong cash flows, and healthy investor interest have kept debt levels under control. The emergence of infrastructure investment trusts and real estate investment trusts has also strengthened credit profiles.
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