Infrastructure is the backbone of any economy. A developing country that aims to become a developed nation should aim to strengthen its infrastructure. These range from road, rail, air and water connectivity to commercial and residential hubs. This helps in creating jobs and increasing income while increasing business activities domestically, as well as internationally in the form of imports and exports.
Well-developed infrastructure keeps a country connected to the world. In this sense, no country can excel without focusing on building infrastructure. And it is for the same reason that the Union Budget allocated an increasing amount every year to capital and infrastructure investments. And in this regards, the infrastructure companies in India have immense opportunities to capitalize on this theme. So let us discuss some of the best infrastructure stocks in India that investors can consider in their portfolios.
Best Infrastructure stocks in India
Following are some of the best infrastructure stocks in India to invest in
1. Dilip Buildcon Limited
Dilip Buildcon Limited is one of the largest infrastructure companies in India. The company initially started its operations building residential projects, petrol pumps, and entering into government contracts. They later started building roads in Madhya Pradesh. The company’s revenues have increased from ₹230 crores in FY10 to ₹9700 crores in FY20.
The company claims that it has completed 95% of all its projects on time. All their construction equipments are owned and they have an employee base of 38,500 people. From just ₹100 crore in FY10, the company has increased its debt burden to ₹9000 crores in FY20. The company already has ₹26,000 crores of projects in their books!
|Market Cap||₹2775 Cr|
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2. Adani Ports and Special Economic Zone Limited
Adani Ports and Special Economic Zone (APSEZ) Limited is India’s largest commercial ports operator and accounts for nearly 25% of the cargo movement in the country. The company has presence across 13 domestic ports in 7 states across India.
The ports that the company operates are equipped to handle diverse cargos, from dry cargo, liquid cargo, and crude to containers. The company has grown its revenues at a CAGR of 13.83% over the last while years, while net profits grew at a CAGR of 6.6% over the same tenure. The company’s return on capital employed stood at 18% for FY21.
|Market Cap||₹143197 Cr|
3. Larsen and Toubro Limited
Larsen and Toubro Limited is a conglomerate that is involved in offering engineering, procurement, and construction (EPC) solutions in sectors such as infrastructure, hydrocarbon, power, information technology and financial services. The company’s revenues have grown at a CAGR of 7.43% over the last five years, while net profits grew at a CAGR of 8.2% over the same period. The company’s return on capital employed stood at 15% for FY21.
|Market Cap||₹220909 Cr|
4. GMR Infrastructure Limited
GMR Infrastructure Limited is engaged in the development and operations of airports, generation of power, coal and exploration activities, development of highways, and engineering, procurement and construction contracting activities.
The company’s revenues have de-grown at a CAGR of 8.19% over the past five years, whereas net profits grew at a modest 1% CAGR over the same tenure. The company’s return on capital employed stood at -0.52% for FY21.
|Market Cap||₹28824 Cr|
5. Engineers India Limited
Engineers India Limited is owned by the Government of India and was established in 1965. The company provides engineering consultancy and related services in the fields of oil and gas, and petrochemical industries.
The company’s revenues have grown at a CAGR of 15.38% over the past five years, whereas net profits grew at a -1% CAGR over the same tenure. The company’s return on capital employed stood at 17.42% for FY21.
|Market Cap||₹3302 Cr|
6. IRCON International Limited
IRCON International Limited was incorporated in 1976 and started its operations as a railway construction company. The company later diversified its business and became an engineering and construction public-sector undertaking with specialization in sectors such as railways, highways, etc.
The company’s revenues have grown at a CAGR of 16.58% over the past five years, whereas net profits grew at a -1.9% CAGR over the same tenure. The company’s return on capital employed stood at 18.60% for FY21.
|Market Cap||₹3390 Cr|
7. Rites Limited
Rites Limited is owned by the Government of India and was incorporated in 1974. The company is a multi-disciplinary consultancy organization and provides services in the fields of transport, infrastructure, and related technologies.
The company’s revenues have grown at a CAGR of 11.03% over the past five years, whereas net profits grew at a 5.29% CAGR over the same tenure. The company’s return on capital employed stood at 23.44% for FY21.
|Market Cap||₹5641 Cr|
|SL No||Stock Name||Market Capital|
|1||Dilip Buildcon Limited||Rs. 2775 Cr|
|2||Adani Ports and Special Economic Zone Limited||Rs. 143197 Cr|
|3||Larsen and Toubro Limited||Rs. 220909 Cr|
|4||GMR Infrastructure Limited||Rs. 28824 Cr|
|5||Engineers India Limited||Rs. 3302 Cr|
|6||IRCON International Limited||Rs. 3390 Cr|
|7||Rites Limited||Rs. 5641|
Discussed above are some of the best infrastructure stocks in India that investors can consider to tap on India’s growth. But investors should also do their due diligence and channel checks such as upcoming properties, debt/equity ratios, valuations, and corporate governance. One must also check the delivery schedule that builders are promising and whether they are adhering to it or not. These are some metrics to be tracked for the right stock picking.
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Frequently Asked Questions
How do I determine the best infrastructure stocks in India?
There are several factors to consider when determining the best infrastructure stocks in India. These may include the company’s financial health, past performance, growth potential, and exposure to specific sectors or regions.
It is also important to consider the current state of the economy and the overall demand for infrastructure projects.
Is it a good time to invest in infrastructure stocks in India?
The timing of an investment in infrastructure stocks in India will depend on a variety of factors, including the current state of the economy and the demand for infrastructure projects. It is always a good idea to do your own research and consult with a financial professional before making any investment decisions.
What risks are associated with investing in infrastructure stocks in India?
Like any investment, there are risks associated with investing in infrastructure stocks in India. These risks may include economic downturns, changes in government policies, and competition from other companies. It is important to carefully consider these risks and to diversify your portfolio to manage your exposure to them.