Abstract: This study applies financial performance evaluation of Construction companies in India. Indian economy has been hit by various economic crises from last few years and the economic stagnation still continues. Experiences in various countries show that it is vitally important to encourage construction activities in order to get out of stagnation, as construction output directly affects other sectors. Current research introduces a performance evaluation model for construction companies in order to provide a proper tool for a company’s managers, owners, shareholders, and funding agencies to evaluate the performance of construction companies. The model developed helps a company’s management to make the right decisions. Financial, economical, and industrial data are collected from 100 Indian construction companies for five consecutive years (2011-2015).Firstly understand the principles underlying in the analysis of financial statements pertaining to the Indian construction organizations. . Previous research has shown that there are about 21 financial ratios that are important for the construction companies. This, in turn, requires elimination of unrelated data. Factor analysis is a data reduction and classification technique, which can be applied in financial analysis. Factor analysis was thus applied to the financial data collected construction companies for a 5-year period in order to determine the financial indicators that can be used to analyze the financial trend of the industry. Seven independent factors, i.e. liquidity, Activity, profitability, long term solvency, Asset management, Inventory and Efficiency were identified to be sensitive to the economic changes in the country. The final outcome of this research is a performance grade, which provides the performance of a construction company and ranking the companies based of calculated performance grade and finally assessing the risk of bankruptcy by using Z-score model.