A growth rate of 36.16% CAGR is projected for the road and highway industry. The road network acts as the lifeline of the country. There are several elements contributing to the massive expanse of Indian highways.
India’s massive population, paired with its exponential economic growth, requires an extensive road network connecting even remote areas. This ensures a decline in regional disparity.
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Road construction industry overview
The government plans to invest $1.4 Tn in infrastructural development by 2025. The sector is forecasted to testify a CAGR of 36.16%. In FY24, 12,349 kilometres of National highway was constructed in India.
The trends show a pinpointed focus of the government on the infrastructural overhaul of the country primarily through infrastructural development. It has rolled out over USD 10 billion worth of projects. The National Highway Authority of India (NHAI) holds a Guinness record for the construction of a seventy-five kilometre Single Lane Bituminous Concrete Road from Amravati to Akola on NH 53 in Maharashtra in a groundbreaking time of 105 hours 33 minutes.
NHAI has also not stayed away from technological upgradation. It has adopted the Fully Digital initiative by enabling a unique cloud-based as well as Artificial Intelligence-powered Big Data Analytics policy.
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Top road construction companies in India
Curated below are the top road construction companies in India listed in the stock market. The corporations are ranked on the basis of market capitalisation.
Larsen & Turbo Ltd.
The group’s seven decades of versatility across many industries, experience, and powerful brand all contribute to its supremacy in the domestic EPC (engineering procurement construction) market. The corporation works on an array of initiatives, from straightforward manufacturing to intricate full EPC projects.
A significant competitive edge is provided by in-house design, engineering, and manufacturing skills for vital systems and equipment. L&T has a solid brand image in India and abroad because of its strong competencies across segments and industries and track record of executing projects according to specifications.
Due to significant cash accrual built up via core operations, the group maintains a cautious financial strategy, as evidenced by its adjusted net debt to EBITDA ratio of 0.5 times as of March 31, 2024 (which comprises capital allocation for the finance subsidiary).
The company enjoys a strong liquidity position. However, it is undergoing a working capital crunch.
IRB Infrastructure Developers Ltd.
IRBIDL was founded in 1998. The company has excellent connections with its stakeholders, including
- NHAI,
- the Ministry of Road Transport and Highways (MoRTH), and
- state government ministries.
More than 15,000 lane kilometres of projects are either in operation or in development.
With the inclusion of long-term operation and maintenance (O&M) contracts for three (Toll Operate and Transfer) TOT projects, the total order book increased to Rs 34,800 crore.
Nevertheless, as the sector saw a fall in granting new projects, the order book executable across the upcoming three fiscal years decreased from approximately Rs 12,000 crore on March 31, 2023, to approximately Rs 9,650 crore on March 31, 2024.
This resulted in an order book-to-revenue ratio of approximately 1.8 times with restricted inclusion of new orders. This fiscal year, the firm is anticipated to bid for and receive a larger number of new orders. The accessibility of revenue may decrease due to the lack of fresh order inflow.
Ircon International Ltd.
Ircon International Limited (IRCON) began operations as a railway manufacturing corporation in 1976. Since 1985, it has gradually expanded to become an integrated engineering as well as construction PSU with a focus on big, technologically complicated infrastructure projects in a variety of industries, including highways and railways.
As of September 2024, 65.17% of the shares are possessed by the Indian government (GoI). The firm was formerly classified as a Mini Ratna. In October 2023, it was raised to a Navratna. It is now a Central Public Sector Enterprise (CPSE) under the Ministry of Railways (MoR), indicating close ties to both the GoI and the MoR.
Since its founding in 1976, IRCON has operated its company effectively for more than 48 years, showcasing great execution skills during that time. It operates in several Indian states as well as other nations, including Sri Lanka, Bangladesh, Nepal, Algeria, Myanmar, and others. For a variety of clients, IRCON has finished more than 128 overseas projects and 401 domestic projects.
Stock comparison
The current market scenario of the road construction companies in India listed in the stock market is shown below.
| Name | P/E | Mar Cap ₹ Cr. | Div Yld % | NP Qtr ₹ Cr. | Qtr Profit Var % | Sales Qtr ₹ Cr. | Qtr Sales Var % | ROCE % |
| Larsen & Toubro | 37.83 | 509314.47 | 0.76 | 4098.84 | 5.36 | 61554.58 | 20.64 | 13.44 |
| IRB Infrastructure Developers Ltd. | 50.59 | 31173.16 | 0.58 | 99.87 | 4.30 | 1585.84 | -9.12 | 8.96 |
| Ircon International Ltd. | 20.14 | 18551.65 | 1.57 | 205.92 | -17.87 | 2447.52 | -18.06 | 18.15 |
Bottomline
Investing in the top road construction companies in India is like investing for the future of India. Given the rate of infrastructural development, the top stocks can be invaluable additions to your portfolio.
However, since it is the infrastructural sector, investors need to stay patient to see returns.
Also read: Adani Green shares slide 10% amid investment pause by TotalEnergies.
FAQs
1. Which stock is the best for road construction?
Larsen & Turbo is the best road construction company stock based on Market capitalisation. The group’s over seven decades of versatility across many industries, experience, and powerful brand all contribute to its supremacy in the domestic EPC market. The company works on a variety of projects, from straightforward construction to intricate full EPC projects.
2. Which listed company makes roads in India?
The trends show a pinpointed focus on infrastructural overhaul primarily through infrastructural development. Many companies are working with the government to construct roadways. Based on market capitalisation the top road construction companies in India are-
- Larsen & Turbo Ltd.
- IRB Infrastructure Developers
- Icron International Ltd.
3. Which company makes most of the roads in India?
One of India’s top road building firms, L&T is the biggest contributor to road construction. From small to huge, urban to rural, simple to complicated, their transportation construction business vertical has planned and built the whole spectrum of roads. In total, about 13,500 kilometers of roads have been built, as well as numerous bridges, complex road interchanges, and toll booths.
4. What is the name of the National Highway stock?
The National Highway stock may indicate NHAI (National Highway Authority of India). It is listed on the stock exchange. NHAI is upheld by the Indian Parliament and overseas in the construction of the road network. It floats tenders and overseas successful completion of projects.
5. Is NHAI listed in the stock market?
NHAI is listed in the stock market. As of 27 November 2024, the stock has got a slight dip of 0.08% and is trading at a market price of 1069.12 on the Bombay Stock Exchange (BSE). It is listed on the stock exchange. NHAI is upheld by the Indian Parliament and overseas in the construction of the road network. It floats tenders and overseas successful completion of projects.
