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Best infrastructure stocks in India

29 November 20235 mins read by Angel One
Highway to profits, here are investing insights into India’s top-performing road construction companies
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India’s infrastructure sector is a key driver of the country’s economic growth, and highway development plays a pivotal role in connecting people, businesses, and markets across the nation. With the government’s ambitious plans to expand and upgrade the national highway network, the highway construction sector is poised for significant growth in the coming years.

As a result, highway stocks have emerged as attractive investment opportunities for investors seeking exposure to India’s infrastructure growth story.

The growth of highway stocks in India is being fuelled by several factors, including the government’s infrastructure push, increasing traffic congestion, improved connectivity and logistics, and tourism and economic growth. The government’s National Highway Development Program (NHDP) is a major initiative that is expanding and upgrading the national highway network, creating immense opportunities for highway construction companies.

India’s rapid urbanization and growing vehicular population are leading to increased traffic congestion on existing highways, necessitating the construction of new highways and the widening of existing ones.

Top 5 highway stocks to consider for investment:

Larsen & Toubro (L&T): L&T is a leading infrastructure conglomerate with a strong track record in highway construction. The company has a diversified portfolio of projects and a robust order book of Rs 4.50 lakhs crore, making it a strong investment choice. Currently, the stock is trading at Rs 3,062 and has given 49.37% returns to its shareholders in the last one year. The company experienced strong order inflows in the second quarter, reflecting the positive capex trends in India and the GCC region. Additionally, the company’s robust execution momentum, driven by its growing order book, contributed to the positive results.

IRB Infrastructure Developers: IRB Infrastructure is an EPC (Engineering, Procurement, and Construction) company specializing in highway development. The company has a strong order book of Rs. 33,700 crores, which will provide good revenue visibility for the construction segment. The company is aiming to build its order book 20% higher than the burn rate for the year, which would result in an order intake of around Rs 5,000-6,000 crore. Currently, the shares of IRB Infrastructure are trading at Rs 37.8 and have given 37.79% returns to its shareholders in the last one year.

PNC Infratech: PNC Infratech is another prominent player in the highway construction sector. The company has a strong presence in the BOT (Build, Operate, and Transfer) segment and is known for its execution capabilities. The company has a robust order book of over Rs. 13,400 crores as of September 30, 2023, and it said that the contract under execution is over Rs. 17,800 crores (including contract worth Rs. 4,412 crores not yet included in order book) which is over 2.5 times of FY23 revenue. Currently, the shares of PNC Infratech are trading at Rs 335 and have given 25.57% returns to its shareholders in the last one year.

Engineers India: Engineers India is a public sector consultancy and engineering firm involved in various infrastructure projects, including highways. The company’s expertise in project management and its strong financial position make it an attractive investment. The company’s order book is worth Rs 8,188 crores, with Rs 4,853 crores under the consultancy segment and Rs 3,335 crores under the Lump Sum Turnkey projects segment. Currently, the shares of Engineers India are trading at Rs 146 and have given 77.42% returns to its shareholders in the last one year.

KNR Constructions: KNR Constructions is a major highway construction company with a pan-India presence. The company has a diversified portfolio of projects and a strong order book, making it a promising investment candidate. There has been a slowdown in awarding activities and project timelines for bidding on EPC and HAM projects. The order book position as of September 30, 2023, is Rs. 5,673.2 crores, with 72% from EPC road projects and HAM projects. The company is targeting an order inflow of Rs. 3,000 to 4,000 crores for the balance of FY2024. Currently, the shares of PNC Infratech are trading at Rs 291 and have given 11.74% returns to its shareholders in the last one year.

Company Name CMP (Rs) Market Capitalization (Rs Cr)
Larsen and Toubro Ltd 3063 4,21,072
IRB Infrastructure Developers Ltd 37.7 22,779
Engineers India Ltd 145.6 8,189
PNC Infratech Ltd 335.7 8,617
KNR Constructions Ltd 291.55 8,192

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.

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