Infrastructure is one of the major sectors of the nation’s economic progress. The government’s last budget shows the priority by allocating ₹11.21 lakh crore, which is 3.1% of GDP to infrastructure development.
This investment focuses on expanding and upgrading critical sectors including highways, railways, airports, and urban facilities. Such significant funding is intended to create employment opportunities, encourage private sector participation, and elevate India’s economic standing globally while addressing infrastructure needs and fostering sustainable growth.
What could be the major challenges in the infrastructure sector?
Earlier it was expected that the infrastructure investments would be around ₹12.50 lakh crore. But the final allocation was short of these expectations, with the government reducing the budget by ₹1 lakh crore. As a result, the total allocation stood at ₹11.21 lakh crore.
Due to this lower than expected allocation towards infrastructure sector, government spending could be reduced. This could also slow down the pace of new projects, affecting sectors like transportation, urban development, and energy. A decrease in infrastructure spending may also have a major effect on job creation and economic growth.
Which are the few best infrastructure stocks?
There are various infrastructure stocks in the market. Each of them is playing an important role in the sector. Let us take a look at a few of them, focusing on those with a high market capitalization (as on 6.02.2025):
| Name of Company | Market Cap. (as on 6th Feb 2025) (₹ cr) | 1-year % return | Price to Earnings ratio | Return On Equity |
| Larsen & Toubro Ltd | 4,60,904 | -1.25% | 33.2x | 14.68% |
| IRB Infrastructure Developers Ltd | 32,586 | -21.67% | 43.6x | 4.38% |
| NBCC (India) Ltd | 25,496 | -10.43% | 45.9x | 24.85% |
| K E C International Ltd | 21,682 | 24.69% | 47.7x | 8.80% |
Larsen & Toubro Limited
Larsen & Toubro Ltd (L&T) is a multinational conglomerate primarily engaged in providing engineering, procurement, and construction solutions. It operates across various sectors such as infrastructure, hydrocarbon, power, defence, etc.
| Particulars | Q3FY25 (₹ Cr) | Q3FY24 (₹ Cr) | YoY change (%) |
| Revenues from Operations | 64,668 | 55,128 | 17.31% |
| EBITDA | 7,898 | 7,199 | 9.71% |
| EBITDA Margin (%) | 12% | 13% | – 100 bps |
| Net Profit | 3,974 | 3,593 | 10.60% |
Key highlights of the company
- The company reported a revenue of ₹64,668 crore in the third quarter, but growth remained moderate at 17.31%. EBITDA margins declined by 100 bps, and the net profit stood at ₹3,974 crore.
- The company’s order book stands at ₹5,64,200 crore, reflecting a 20% increase compared to last year, while the order inflow is around ₹1,16,000 crore.
- During the quarter, the company received a major order to manufacture 100 K9 Vajra Artillery from the Defence Ministry of India under the Make in India vision of the government.
Also Read: Larsen & Toubro Ltd. share analysis
IRB Infrastructure Developers Limited
IRB Infrastructure Developers Ltd is one of the infrastructure development and construction companies in India with experience in the roads and highways sector. It is also involved in other infrastructure segments, which includes road maintenance, construction, airport development, and real estate.
| Particulars | Q3FY25 (₹ Cr) | Q3FY24 (₹ Cr) | YoY change (%) |
| Revenues from Operations | 2,025 | 1,969 | 2.84% |
| EBITDA | 984 | 819 | 20.15% |
| EBITDA Margin (%) | 49% | 42% | 700 bps |
| Net Profit | 6,026 | 187 | 3122.46% |
Key highlights of the company
- During the quarter, IRB reported a slight 2.84% growth, reaching ₹2,025 crore. EBITDA margins grew by 700 bps, and net profit increased from 187 crore to 6,026 crore. This major spike was due to an increase in other income received during the quarter.
- The company management is expecting orders from NHAI once their tenders are approved, and they are approximately expecting orders from them.
- The management has raised concerns about the bidding process for BOT and TOT projects, and expecting faster executions in the coming quarters.
NBCC (India) Ltd
NBCC (India) Limited is a Government of India Navratna enterprise under the Ministry of Housing and Urban Affairs. The company operates in three major segments: Project Management Consultancy, Engineering Procurement & Construction, and Real Estate.
| Particulars | Q2FY25 (₹ Cr) | Q2FY24 (₹ Cr) | YoY change (%) |
| Revenues from Operations | 2,459 | 2,059 | 19.43% |
| EBITDA | 100 | 96 | 4.17% |
| EBITDA Margin (%) | 4% | 5% | -100 bps |
| Net Profit | 125 | 82 | 52.44% |
Key highlights of the company
- The company reported a revenue of ₹2,459 crore, up 19.43% compared to the previous year. Further, EBITDA margins declined by 100 basis points during the quarter. However, net profit rose by 52.44%, reaching ₹125 crore.
- The company’s order book stands at ₹84,400 crore, with 55% from PMC/EPC projects and 45% from redevelopment projects.
- The company is developing a satellite township in Srinagar, J&K, valued at ₹15,000 crore. It has also commenced the first phase of work in Goa, valued at ₹1,726 crore, and is undertaking the redevelopment of land parcels in Jhansi, valued at ₹700 crore.
K E C International Limited
KEC International is a global infrastructure EPC major engaged in Power Transmission and Distribution, Railways, Civil, Urban Infrastructure, Solar, Oil & Gas Pipelines, and Cables.
| Particulars | Q3FY25 (₹ Cr) | Q3FY24 (₹ Cr) | YoY change (%) |
| Revenues from Operations | 5,349 | 5,007 | 6.83% |
| EBITDA | 374 | 308 | 21.43% |
| EBITDA Margin (%) | 7% | 6% | 100 bps |
| Net Profit | 130 | 97 | 34.02% |
Key highlights of the company
- The company’s revenue was reported at ₹5,349 crore, up only 6.83% compared to last year. EBITDA margins also slightly improved by 100 basis points, and net profit was reported at ₹130 crore.
- Management mentioned a slowdown in growth due to delays in execution, majorly because of labor shortage. This shortfall impacted the project timelines and overall performance of the company.
- The company carries a debt of ₹4,312 crore, leading to a high debt to equity ratio of 0.85. This shows a major leverage, which may impact financial stability of the company.
Also Read: Budget 2025: How It Affects Healthcare Sector Stocks
Peer analysis
Peer analysis helps to evaluate key players in the specific sector, focusing on their financial ratios and other financial metrics. It highlights their strengths and weaknesses. Further let us take a look at the peer comparison of infrastructure stocks:
| Name of Company | Market Cap. (₹ cr) | 1-year % return | Price to Earnings ratio (Ind. Avg: 38x – 43x) | Good/Bad | Price To Book Value.(Ind. Avg: 3.50-4) | Good/Bad |
| Larsen & Toubro Ltd | 4,60,904 | 0.37% | 32.8x | 👍 | 5.15 | 👎 |
| IRB Infrastructure Developers Ltd | 32,586 | 22.26% | 41.8x | 👍 | 2.29 | 👍 |
| NBCC (India) Ltd | 25,496 | 6.24% | 43.7x | 👍 | 10.4 | 👎 |
| K E C International Ltd | 21,682 | 25.39% | 47.8x | 👎 | 4.25 | 👍 |
Also Read: The Pros and Cons of Small-Cap Stock Investments
Bottomline
The infrastructure sector in India may face a major challenge, including funding constraints, regulatory delays, land acquisition issues, and a shortage of skilled workers. Overall, while the sector may hold a long-term potential, execution efficiency, policy support, and financial stability will be crucial in determining future growth.
