Top Construction Stocks to Invest in India

How do developed and underdeveloped countries differ from each other? How does Mumbai differ from the forests of Uttarakhand? The answer is construction. People define infrastructure to mean different things. It includes roads, bridges, airports, railways, etc.

In case India wants to become one of the biggest Gross Domestic Product countries (GDP), it is essential to have the development of infrastructure and the construction industry. In this article, we talk about the construction sector, the pros and cons of investing in this sector and the best construction stocks.

Overview of the construction industry

In India with the increasing population, there is a demand for more housing facilities, more water treatment plants, more power generation and transmission plants, better roads and bridges, more schools and hospitals etc. Along with that old infrastructure also needs to be upgraded.

With the government spending a lot on infrastructure projects and private firms helping in this effort, the construction companies have their order books busy for some years ahead. Under the National Infrastructure Pipeline(NIP), projects worth 1.3 trillion dollars are at different stages of completion and implementation.

Why invest in construction stocks? 

• Government push: There is a substantial money outlay by the Indian government in order to promote the growth of infrastructure across India. In the 2025 budget, the government set aside ₹11.21 lakh crore for capital expenditure which is approximately 3.1% of the Gross Domestic Product. 

These are just some of the many policies and initiatives of the government to boost the construction sector in our country.

Also Read: PM Narendra Modi launches historic infrastructure projects worth ₹1 lakh crore

• Economic development: The economic growth of a country and its construction sector move hand in hand. When an economy grows and incomes rise, people and businesses need infrastructure, this gives a push to the construction sector. 

This demand for infrastructure is fulfilled by the construction companies and this in turn leads to more economic growth, and this becomes a self-reinforcing cycle.

• Growing population: After China, India is now the most populated country in the world. Currently, the only country with approximately 1.45 billion people is India, and this number is expected to reach approximately 1.7 billion in the 2060s. There is a need for more and more products such as housing, schools, power, water, healthcare facilities, etc. considering the people and population pressure.

This is enough to keep the construction sector busy for a few decades.

• FDI interest: With supportive government policies, rising incomes and growing demand, MNCs want to sell their products and services in India. They also want to benefit from the Indian business landscape. 

As a result of this from April 2000 to September 2023, the construction sector in India attracted 26 billion U.S. dollars in foreign direct investments (FDI) for construction development. Another 32 billion U.S. dollars went into construction activities.

Key considerations before investing in construction sector

• Regulatory and Bureaucratic challenges: Indian construction companies have to go through complex regulatory processes that involve land acquisition, permissions, disparity in regional rules, etc 

These problems reduce the ease of doing business and delay project timelines. Corruption and non-transparent bureaucratic involvement also make this sector a complex investment avenue.

• Labour shortages: Construction involves a lot of skilled labour. People with expertise are required to complete these processes but there is a big shortage of skilled workers in India. Training new people is a time consuming and expensive process. 
• Cost and time overruns: Projects of such large scale often face various hurdles. 

Increase in prices of raw materials, labour strikes, environmental concerns, local protests are some of the reasons that lead to cost overruns for these companies and early monsoon, late approvals etc. lead to time delays.

• Market volatility and competition: Construction sector has a lot of big players both listed and non-listed and both public and private companies. These are cash rich companies who bid for tenders. Sometimes this bidding process brings down the profitability of these companies. 

Unforeseen economic events like interest rate hikes, fiscal tightening, etc also affect these companies adversely.

Also read: Fiscal policy and interest rate: What’s the link?

5 best companies in construction sector

Here are the 5 best construction stocks in India in terms of market capitalization as on March 24, 2025:

1. Rail Vikas Nigam Limited: Established in 2003 by the Government of India, Rail Vikas Nigam Ltd. undertakes various rail infrastructure projects assigned by the Ministry of Railways. These projects include new lines, railway electrification, major bridges, workshops, and production units. As of the third quarter of FY25 the company has ₹4,61,252 crores in assets under management. 
2. IRB Infrastructure Developers Limited: IRB Infrastructure Developers Ltd., an Indian infrastructure development and construction company, has substantial experience in the roads and highways sector. In Q3FY25 the company has 10% share of pan India toll collection, 15,444 km lane portfolio. 
3. Afcons Infrastructure Limited: Afcons Infrastructure Limited is an infrastructure engineering and construction company that was established in 1959. As of 9MFY25, the company has an order book of ₹30,961 crores, and this company builds roads, bridges, marine infrastructure, metro, tunnels, etc. The company has over 60 overseas projects. 
4. IRCON International Limited: Ircon International Limited (IRCON), established in 1976 as a railway construction company, has expanded its expertise since 1985. IRCON is now a diversified, integrated engineering and construction PSU specializing in large-scale and technologically complex infrastructure projects across various sectors, including railways and highways.
5. NCC: With a presence of over four decades NCC has undertaken many construction projects like buildings, transportation, mining, railways, etc. This company received orders worth ₹8,440 crores in the September-December period in 2024. This company has completed various mega projects like airports, stadiums, campuses for medical and engineering colleges, highways etc. 

Also read: Unlocking your investment potential: Residential vs commercial properties

Financial performance for the aforementioned companies in FY2024:

Fundamental metrics (In ₹ Cr)	RVNL	IRB Infra	Afcons Infra	IRCON Intl.	NCC
Market Capitalisation(24th March 2025)	77,771	28,727	18,019	15,640	13,140
Sales	21,733	7,409	13,268	12,331	20,845
Expenses	20,386	4,387	11,890	11,406	19,076
Profit before tax	1,939	951	673	1,261	1,061
Net profit	1,463	606	450	930	740
RoE (%)	20.4%	4.38%	14.5%	16.4%	11.4%

Bottomline 

If you are looking forward to investing in the best Indian construction stocks this can be the best time considering the rising demand for infrastructure in India.  

Always remember that this sector often faces challenges of various magnitudes. So always conduct an in-depth analysis of the companies you want to invest in. Past performance does not guarantee future returns. 

FAQs

Which is the biggest construction sector company in India? 

As on 24th March 2025, RVNL has become the largest construction company in India with a market cap of ₹77,771 crores. In FY24, the company also recorded the highest revenue and net profit among all the construction firms in India. It undertakes various rail infrastructure projects assigned by the Ministry of Railways.

Name top 5 construction companies of India? 

Compared by market capitalization (on March 24, 2025) the top 5 companies in the construction sector are – NCC, RVNL, IRCON, Afcons and IRB Infra. In FY24 these companies had a combined revenue of ₹75,586 crores. 

Which is the biggest construction company in the world? 

China State Construction Engineering Corporation (CSCEC) is the largest constructor in the world by revenue in CY24. It generated 310.83 billion U.S. dollars worth of revenue in 2024. In fact, among the world’s largest construction companies, the top 6 belong to China.

Which construction sector stock is the best long term investment? 

If you want to invest your money for the long term in construction space, then RVNL might be a good choice since it is the biggest construction company in India. And this company had a Net profit of ₹1,463 crore as of the third quarter of the current financial year. Investors must conduct their own detailed research before investing. 

Which construction stock pays the highest dividend?

IRCON ltd. has a dividend yield of 1.84% as of Q3FY25 which is highest among its peers. This company is involved in development of large-scale and technologically complex infrastructure projects across various sectors, including railways and highways.

Why should I consider investing in construction stocks?

The growth potential of construction stocks is driven by infrastructure development, which fuels demand. Government initiatives, urbanization, and private sector investments can all contribute to increased revenue and stock price appreciation for construction companies. Additionally, established companies in the construction sector may offer dividends, providing passive income opportunities for investors.

Are there different types of construction companies?

Yes, construction companies are typically classified into sectors like residential, commercial, industrial, and infrastructure. Some focus on general contracting, while others specialize in engineering, materials, or real estate development. Diversification across these types can help manage risk.

Is investing in construction stocks risky?

Construction stocks are indeed subject to volatility due to a range of factors. These include economic cycles, fluctuations in interest rates and raw material costs, as well as changes in government policies. Additionally, project delays and labor shortages can impact the profitability of construction companies. To mitigate these risks, investors should conduct thorough research and diversify their investment portfolios.

Are construction stocks a good option for beginners?

For beginners with a long-term investment horizon, particularly in growing economies, construction stocks can be a suitable option. Investing in well-established companies with robust financials can mitigate risk. Alternatively, beginners can explore ETFs that track the construction sector to achieve diversified exposure.

What resources can help me learn more about construction stocks?

To further your understanding, explore the following resources:

Investment courses: Coursera, Stockgro

Financial news: Bloomberg, Reuters, CNBC

Stock performance data: NSE, BSE, Stockgro

Market research reports

Company earnings calls