Author
LoansJagat Team
Read Time
15 Min
05 May 2025
Best Infra Stocks – High-Growth Infrastructure Shares in Focus
For example, you invested ₹1,00,000 in IRB Infrastructure last year when the share price was ₹40, which is 2,500 shares.
Now, let’s say the government announces ₹2,00,000 crore for highways, and IRB gets ₹20,000 crore worth of contracts. That’s 2.5 times what they made last year (₹8,000 crore). This could mean big growth for IRB, making your investment even more valuable!
Imagine if IRB's profit doubles and its stock price goes up. That ₹40 stock could rise to ₹80 or more.
Your ₹1,00,000 investment could turn into ₹2,00,000, just like that!
Pretty exciting. While tech stocks might have hit their peak, infrastructure is just beginning to grow. With strong government support, steady demand, and good dividends, infrastructure stocks could be a hidden gem in your portfolio.
Let’s look closer and see why this sector is worth watching!
What Are Infra Stocks?
Infrastructure stocks are shares in firms that construct and maintain roads, bridges, power lines, and the internet. These things keep a country operating. Governments tend to invest funds in these projects, which benefits these firms. Because individuals always require stuff like water, electricity, and transport, these firms tend to have stable demand and revenues.
Why Invest In Infra Stocks?
The information below is sourced from an article in the Economic Times.
Let’s say the Indian government announces a ₹10,00,000 crore ($120 billion) infrastructure spending plan over the next five years.
This includes:
- ₹2,00,000 crore for highways
- ₹1,50,000 crore for water pipelines
- ₹1,00,000 crore for smart cities
- ₹75,000 crore for power and renewable energy projects
Now, imagine a company like IRB Infrastructure, which builds highways, gets contracts worth ₹20,000 crore from this plan. If the company’s revenue was ₹8,000 crore last year, that’s a 150% jump in future revenue potential. Naturally, this can drive its stock price higher and increase dividends to investors.
What does this mean for Investors?
1. Steady Demand:
Even when the economy is slow, people still use roads, electricity, and water. These companies continue earning no matter what.
2. Government Support:
Huge spending plans like the one above guarantee demand for infrastructure companies, leading to long-term growth and stability.
3. Consistent Returns:
Many of these companies pay regular dividends, and some offer fixed returns through InvITs (Infrastructure Investment Trusts).
4. Inflation Protection:
Infrastructure contracts often include inflation-linked pricing, meaning they automatically adjust for rising costs, helping investors keep pace with inflation.
5. Diversification:
You don’t have to invest in just one area. Infrastructure covers roads, energy, telecom, and water, spreading out your risk.
6. Big Projects for Small Investors:
With InvITs, even someone with ₹10,000 can invest in massive national projects that were once only for big players.
7. Better Opportunity Than IT Right Now:
According to expert Neeraj Dewan, IT stocks like TCS have already had big gains. Infrastructure stocks, however, are just getting started with room to grow.
8. Other Sectors to Watch:
Dewan also points to tourism, especially hotels and airlines, due to busy travel seasons and wedding events boosting demand.
Why Choose Infrastructure Stocks Now?
Reason | Explanation |
Steady Demand | People always need things like roads, electricity, and water, even when the economy is not doing well. |
Government Spending | Big government plans worth ₹10 lakh crore create more work and help companies grow. |
Regular Income | Many companies give regular income through dividends or fixed returns using InvITs (Infrastructure Investment Trust). |
Inflation Hedge | Contracts usually increase with rising prices, so companies don’t lose money when costs go up. |
Diversified Exposure | You can put your money into different areas like electricity, roads, mobile networks, and more. |
Access For Small Investors | InvITs allow small investors to take part in large national projects. |
Growth Potential vs IT | Experts say IT has already grown a lot, while infrastructure still has more potential to increase. |
Tourism Sector Boost | Travel and weddings are helping hotels and airlines do better. |
Best Infrastructure Stocks In India:
Here’s a list of some of the best infrastructure stocks in India, based on financial stability, growth potential, and market performance:
NOTE: The following data has been procured from the official website of Google Finance.
Stock Name | Market Cap (₹ Cr) | P/E Ratio | Dividend Yield (%) | 1-Year Return (%) |
Irb Infrastructure Developers Ltd | 283.90B INR | 4.41 | 0.79% | -31.59% |
Ircon International Ltd. | 147.97B INR | 19.37 | 1.88% | -38.37% |
Rites Ltd. | 111.74B INR | 32.70 | 3.18% | -32.27% |
HFCL Ltd. | 117.22B INR | 31.96 | 0.25% | -17.03% |
Engineers India Ltd. | 103.63B INR | 25.03 | 1.62% | -22.43% |
Techno Electric & Engineering Company Ltd. | 127.57B INR | 33.45 | 0.64% | +7.64% |
NBCC (India) Ltd. | 262.42B INR | 52.42 | 0.65% | +2.83% |
KEC International Ltd. | 190.12B INR | 40.93 | 0.56% | -2.12% |
Important Key Points:
Key Term | Meaning | How It's Calculated | Example |
Market Cap | Shows the total value of a company in the stock market. | Share Price × Number of Shares | If share price = ₹100, shares = 1 crore, Market Cap = ₹100 × 1 crore = ₹100 crore |
P/E Ratio | Tells how much investors are willing to pay for ₹1 of the company’s earnings. | Share Price ÷ Earnings Per Share (EPS) | If share price = ₹200, EPS = ₹20, then P/E = 200 ÷ 20 = 10 |
Dividend Yield | Shows how much return you get from dividends compared to the share price. | (Annual Dividend ÷ Share Price) × 100 | If dividend = ₹2 and share price = ₹50, dividend yield = (2 ÷ 50) × 100 = 4% |
1-Year Return | Shows how much your investment has grown or dropped in one year. | (Gain ÷ Original Investment) × 100 | Priya invested ₹40,000, now it's ₹50,000. Gain = ₹10,000 → (10,000 ÷ 40,000) × 100 = 25% |
Key Factors Affecting Infrastructure Stocks:
Let’s take an example: IRB Infrastructure Developers Ltd, a leading player in India’s road construction and toll operations sector.
As of now:
- Market Cap: ₹2.83 lakh crore
- P/E Ratio: 4.38 (very low, meaning it's trading cheaply compared to earnings)
- Dividend Yield: 0.80%
- 1-Year Return: -28.25% (The stock has seen a significant decline over the past year.)
IRB works in an important area and gets support from the government, yet its stock has gone down. To understand why this is happening, let’s look at the main reasons that affect infrastructure companies like IRB.
Here are some key factors affecting infrastructure stocks:
Factors | Explanation |
Economic Factors | |
Economic Growth | When India's economy grows, more roads are built, benefiting IRB. If the economy slows, earnings may drop, causing the stock to fall. |
Interest Rates | IRB borrows money for projects. Higher interest rates make loans more expensive, reducing profits and hurting earnings. |
Inflation | Rising material costs (like cement) can increase expenses. If toll income doesn’t rise accordingly, IRB’s profits can decrease. |
Government and Political Factors | |
Government Policies | Government road projects like Bharatmala help IRB, but payment delays or policy changes can reduce income. |
Political Stability | Local political issues can delay approvals, impacting project timelines and IRB’s earnings. |
Company-Specific Factors | |
Project Portfolio | IRB has a strong list of projects, but delays or slower traffic growth can hurt earnings. |
Financial Health | Despite a low P/E ratio (4.38), the negative return (-28.25%) indicates market concerns over revenue, debt, or execution. |
Sector-Specific Risks | |
Environmental and Social Risks (ESG) | Road projects face opposition on land use and pollution. Missteps in environmental or social concerns can cause delays and bad press. |
Operational Risks | Road projects are complex, and delays due to weather, land issues, or technical challenges can lead to higher costs. |
Funding Risks | Infrastructure projects require steady capital. If funding is reduced or delayed, projects may stall, negatively impacting IRB’s stock and performance. |
Factors To Consider Before Investing In Infrastructure Stocks:
1. Company's Order Book:
What to Look For | Explanation |
Order Book | A large and diverse order book indicates future revenue potential. |
Example: Techno Electric & Engineering | As of the latest quarterly report, Techno Electric & Engineering has an order book worth ₹15,000 crore. This includes projects across multiple sectors: |
Power Transmission | ₹5,000 crore |
Renewable Energy | ₹4,500 crore |
Industrial Infrastructure | ₹5,500 crore |
Completion Timeline | These projects are expected to be completed over the next 3-5 years, providing a strong pipeline of future revenues. |
2. Debt Levels:
What to Look For | Explanation |
Debt-to-Equity Ratio | A manageable debt-to-equity ratio is crucial for assessing financial stability. |
Example: Techno Electric | |
Debt-to-Equity Ratio | 1.2 (The company has ₹1.20 of debt for every ₹1 of equity) |
Total Debt | ₹2,400 crore |
Equity Capital | ₹2,000 crore |
Interest Coverage Ratio | 5.4 (The company earns 5.4 times more than its interest expenses, based on EBIT) |
Why It Matters | A strong interest coverage ratio shows the company can comfortably manage its debt obligations. |
3. Financial Health:
What to Look For | Explanation |
Financial Health | Positive revenue growth, cost control, and healthy cash flow are signs of a financially sound company. |
Example: Techno Electric | |
Annual Revenue (Last Fiscal Year) | ₹3,800 crore |
Revenue Growth (YoY) | 10% increase |
Net Profit | ₹250 crore |
Profit Margin | 6.6% |
Free Cash Flow (FCF) | ₹300 crore |
Debt Repayment from FCF | ₹150 crore |
Why It Matters | Strong revenue and profits with effective use of cash flow reflect financial strength and smart management. |
4. Management Quality:
What to Look For | Explanation |
Management Quality | Experienced and strategic leadership is key to successful project execution and long-term growth. |
Example: Techno Electric | |
Leader | Mr. Ramesh Kumar |
Experience | Over 35 years in the infrastructure and power sector |
Key Achievement | Completed a ₹1,500 crore transmission line project ahead of schedule |
Strategic Initiative | Expanded into renewable energy, adding ₹1,200 crore to annual revenues |
Why It Matters | A visionary and experienced leader can drive efficiency, innovation, and business expansion. |
Challenges And Risks In Infrastructure Stocks:
The information below is sourced from an article in the Business Standard.
Here’s the example of Rising Roads Infra Ltd., an Indian company worth ₹9,500 crore.
- Strong Start: The company built highways and solar parks, seeing an 18% rise in revenue over the past year.
- Big Loan: To fund ₹4,000 crore of ongoing projects, they borrowed ₹1,660 crore from foreign lenders at a low interest rate, with ₹1 Dollar equal to ₹83.
But then, the rupee weakened:
- Currency Risk: The rupee fell to ₹87 per dollar. This meant Rising Roads had to pay ₹3.2 more per dollar on its loan.
- Unexpected Costs: The company now faced an extra ₹64 crore in costs that weren’t planned for.
- Impact: Profits dipped, stock fell by 12%, and investors got nervous.
This shows how currency risk can hurt companies that borrow in dollars but earn in rupees.
Why Are Infrastructure Companies at Risk?
Infrastructure companies, especially those in renewable energy, often face higher risks because they:
- Spend heavily upfront on capital (called capex)
- Already have large foreign loans
- May need to borrow more soon, often 30% more than their existing debt
Let’s say Rising Roads Infra already had ₹1,660 crore in dollar loans and plans to borrow another ₹500 crore next year to expand its solar park business. If the rupee keeps weakening, repaying these loans becomes even costlier.
Common Challenges in Infrastructure Investing:
Rising Roads Infra’s story highlights the deeper risks that are common in infrastructure stocks. These companies operate in complex, slow-moving sectors and face unique obstacles:
Risk | What It Means |
Market Fluctuations | Rising Roads’ stock dropped 12% when profits dipped—infra stocks can be volatile. |
Policy Changes | A delayed environmental approval added 6 months to one of its highway projects. |
Project Delays | Issues like land acquisition and permits stalled projects, affecting cash flow. |
High Upfront Costs | The company invested ₹4,000 crore before seeing any return, which is common in infra projects. |
Slow Economy | If GDP slows, the government cuts infrastructure spending, reducing new project opportunities. |
Big Project Risks | If one ₹1,000 crore project fails, it could significantly damage the company’s balance sheet. |
Too Much Debt | High debt means high interest payments, especially when foreign loans are involved. |
What Is The Future Of Infrastructure Stocks In India?
The information below is procured from the news articles of the Economic Times.
Example:
Take L&T (Larsen & Toubro), a major Indian infra player with a market cap of ₹4.5 lakh crore. In FY24, it secured new orders worth ₹2.6 lakh crore, up 20% YoY, driven by government-backed infra projects. With fresh infrastructure spending and rising demand, stocks like L&T could shine in 2025.
Why Infra, Manufacturing & Commodities May Boom in 2025?
1. Demand Revival:
People, businesses, and the government are spending more. This boosts construction, factories, and the need for cement, steel, and oil.
2. Commodity Prices Rebounding:
After a dip, prices of cement, metals, and oil are rising again. This benefits companies that produce or use them.
3. Better Profits for Oil Companies:
Refining margins (profit from turning crude into fuel) are improving, lifting earnings.
4. Government Spending on the Rise:
Mihir Vora from TRUST Mutual Fund says government investment in railways, defence, and infrastructure will surge post-elections, giving a strong push to mid and small-cap infra stocks.
What’s Driving Growth in 2025?
Factor | What It Means for 2025 |
Govt Spending | Boosts infra, railways, and defence |
Commodity Price Recovery | Helps metals, cement, and oil companies |
Demand Revival | Stronger construction and capex cycles |
Tech Infra Growth | Data centres, AI infra add fresh investment flows |
Mid & Smallcap Focus | Better growth than large caps, says Mihir Vora |
Who Should Invest In Infrastructure Stocks?
For example, NCC Ltd, a mid-cap infra company with a market cap of ₹10,000 crore. It has an order book of over ₹56,000 crore, covering roads, buildings, and water projects. Despite strong fundamentals, the stock trades 30% below its historical average valuation, making it attractive for long-term investors.
Who Should Consider Infra Stocks?
Investor Type | Why It Fits |
Long-Term Investors | Big projects = big rewards over 2–4 years |
Income Seekers | Many pay regular dividends from stable earnings |
Portfolio Diversifiers | Less volatile vs. tech or smallcaps |
Growth Believers | Infra = direct play on India’s development story |
Risk-Tolerant Planners | Some delays are possible, but solid returns for patient investors |
Why Infra Stocks Make Sense Now?
1. Government Boost:
The Indian government has increased its infrastructure spending massively, and roads, railways, and metro projects are in full swing.
2. Cheaper Loans:
Interest rates are expected to come down. That means lower borrowing costs for infrastructure firms, helping profits grow.
3. Low Valuations = Opportunity:
Many top infra stocks are still undervalued by 25–40%, offering a chance to buy quality companies at a discount.
4. Steady Income & Growth:
These firms earn from tolls, power, and contracts, often sharing profits via dividends.
5. Ideal for Long-Term Thinkers:
Infra projects take time. But patient investors can benefit as projects complete and cash flows kick in.
How To Invest In Infrastructure Stocks?
Open a DEMAT Account: Begin by opening a DEMAT account and associating it with your current bank account to simplify making transactions.
Sign In: Access your DEMAT account through a mobile app or a web interface.
Select a Stock: Select the stock in which you wish to invest.
Verify Funds: Confirm that you have sufficient funds in your bank account to purchase the shares you desire.
Buy the Stock: Take out your money and buy the stock at its quoted price, and specify how much you would like to buy.
Completion of Transaction: When a seller finds your offer acceptable, your transaction will be completed. Your bank account will be debited, and the shares will be credited to your DEMAT account.
How To Open a Demat Account?
- Visit the DP's Website: Go to the official website of your chosen Depository Participant (DP), like Angel One, Groww, Upstox.
- Fill Out the Form: Enter your details, such as name, address, PAN, bank information, and other required information.
- Upload Documents: Upload scanned copies of your KYC documents, such as your PAN card, Aadhaar card, and a photo of your signature.
- Complete KYC Verification: You may need to complete Aadhaar-based e-KYC or send physical documents for verification.
- E-sign the Form: Use an OTP sent to your Aadhaar-linked mobile number to electronically sign the form.
- Submit and Track: After submitting, you will receive a reference number that you can use to track your application status.
Conclusion:
Investing in infrastructure stocks can be a smart choice for long-term growth and stability. With the Indian government planning ₹10,00,000 crore in infrastructure spending, including ₹2,00,000 crore for highways and ₹75,000 crore for power projects, companies in this sector are set to benefit.
Infrastructure stocks provide consistent demand, protection against inflation, and regular income through dividends or InvITs. Despite challenges like delays and political risks, they offer strong growth potential with government support and increasing demand.
As India builds more infrastructure, it's a great time to think about adding these stocks to your investment. Whether you want reliable returns or growth, infrastructure stocks are a good opportunity for 2025 and beyond!
FAQS related to Infrastructure Stocks:
Q1: What does the future hold for infrastructure stocks in India?
Infrastructure stocks in India have strong long-term growth potential, driven by ongoing government investment in infrastructure development. They stand to benefit from India’s economic growth well into 2025 and beyond.
Q2: What are the strategies for investing in infrastructure?
Infrastructure investing offers various strategies based on risk and return, including investment-grade, high-yield, core, core-plus, value-add, and opportunistic approaches, allowing investors to choose based on their goals and risk tolerance.
Q3: Is infrastructure considered an alternative investment?
Yes, infrastructure is an alternative investment, often through direct project investments or infrastructure-focused private equity funds, diversifying portfolios outside traditional assets.
Q4: Why should you invest in infrastructure stocks?
Infrastructure stocks offer stable income and consistent returns, outperforming public equities and fixed income across different market conditions.
Q5: Which sectors are part of infrastructure in India?
In India, infrastructure includes sectors like power, telecom, roads and bridges, construction, oil and gas, ports, aviation, railways, urban infrastructure, and infrastructure finance, focusing on key decision-makers and financial managers.
Other Stocks List | ||
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LoansJagat Team
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