PEB manufacturers to see 10-12% revenue growth

PEB structures are preferred for industrial and infrastructure buildings due to their time and cost benefits, typically reducing installation time by 40-50% compared to traditional structures and saving costs on steel and labor. The main sectors fueling demand for PEB structures are manufacturing, infrastructure, and real estate.

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According to a CRISIL Ratings report, manufacturers of pre-engineered buildings (PEB) are projected to see a revenue growth of 10-12% in the current and next fiscal year, driven by robust industrial capital expenditure (capex) and government spending on infrastructure. The report noted that despite this growth PEB companies face constraints due to optimal capacity utilization, leading to ongoing capacity expansion. However, their credit profiles are expected to remain stable due to low reliance on debt.

PEB structures are favored for their time and cost efficiency, typically reducing installation time by 40-50% compared to traditional buildings and cutting costs through lower steel and labor needs. They also offer modular design and high recyclability, which boosts their appeal. Key industries driving PEB demand include manufacturing, infrastructure, and real estate. 

Anand Kulkarni, Director, CRISIL Ratings stated, “Industrial capex, which accounts for around 50 per cent of the PEB demand, is expected to remain healthy over the next two fiscals. 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. Here, growth will be strong over the next couple of years, backed by e-commerce and associated expansion of logistics players.” 

Infrastructure capex accounts for 38-40% of PEB demand, with applications across sectors including airports (hangars, terminal buildings), roads (toll plazas), and railways (yards, parts of stations). Increased government spending on infrastructure is likely to drive demand in future.

The report indicates that increasing scale of operations and better absorption of fixed costs, along with steady raw material prices, will boost industry profitability. However, any significant rise in steel prices could impact profitability and will need to be monitored.

CRISIL Ratings based its findings on an analysis of five major PEB players, which together represent over 80% of the organized industry.