Best Infrastructure Stocks in India: A Comprehensive Guide for Investors

infrastructure stocks

Infrastructure is a critical component of India’s economic framework, underpinning its ambition to become a $5 trillion economy by 2025. Recognizing the sector’s pivotal role, the Indian government has allocated an unprecedented ₹111 lakh crores (about $1.4 trillion) to infrastructure projects through the National Infrastructure Pipeline (NIP) from 2020 to 2025.

The infrastructure sector’s impact on the stock market has been equally profound. The S&P BSE Infrastructure Index has surged by approximately 102.19 % over the last year, signaling robust investor confidence. By investing in infrastructure stocks, investors engage with a market segment that is not just financially lucrative but also integral to the nation’s strategic growth objectives.

This blog explores the best infrastructure stocks in India, providing an analytical snapshot of their financial health and market performance.

Disclaimer: The content provided in this article is intended solely for informational purposes. We encourage you to perform your own analysis and proceed with caution before making any investment decisions.

List of Best Infrastructure Stocks in India: 2024’s Top Picks

Name

Mkt Cap (₹ Cr.)

Dividend Yield(in%)

ROE (Return on Equity)

ROCE (Return on Capital Employed)

Net Cash flow (₹ cr)

Book Value

Stock PE

Debt to equity

Larsen & Toubro

4,49,716

0.86

14.8

13.4

-4,984

628

34.6

0.35

IRB Infrastructure Developers Limited

37,834

0.48

4.47

9

-68

22.8

62.4

0.64

GMR Airports Infrastructure Limited

48,348

0.0

4.49

1,620

-1.66

0.13

HFCL Limited

13,502

0.21

9.34

13.3

-40

27.4

40.9

0.21

Ircon International Limited

21,472

1.31

15.4

15.7

1080

58.9

22.9

0.0

Note: This blog is only for informational purposes; we are not SEBI registered, and we are not promoting any company or pushing you to buy stocks of a specific company; please do your research before purchasing the stocks.

Insights on Top Infrastructure Stocks in India for Investment in 2024

Now let us analyse the best infrastructure stocks in India in detail. Here is the best infrastructure stocks list:

1. Larsen & Toubro Ltd

Investing in Larsen & Toubro offers a strategic entry into a diversified conglomerate that excels in engineering, procurement, and construction across critical sectors like infrastructure and defense. The company’s long-term performance is underscored by a decade-long compounded sales growth of 10% and profit growth of 11%.

With a consistent dividend payout and a stock price compound annual growth rate (CAGR) of 13% over ten years, L&T demonstrates strong financial health and growth potential. Despite some concerns over increased working capital days and a ROE fluctuation, L&T’s recent total return metrics are robust, making it an attractive investment for those seeking steady growth in a foundational sector of the economy.

2. IRB Infrastructure Developers Limited

Another top infrastructure stock in India, IRB Infrastructure Developers Ltd presents an attractive investment opportunity, especially for those interested in India’s infrastructure growth, particularly in the roads and highways sector.

The company stands out for its healthy dividend payout of 47.0% and significant improvements in operational efficiency, including a reduction in debtor days from 64.4 to 37.4 and working capital days from 90.6 to 47.6. Despite challenges such as a modest sales growth of 2.01% over the past five years and a low return on equity in the last three years, IRB has shown remarkable resilience.

The stock’s extraordinary price CAGR of 80% over three years highlights strong market confidence and potential for high returns.

3. GMR Airports Infrastructure Limited

GMR Airports Infrastructure Limited offers an intriguing opportunity for investors interested in the airport and infrastructure sectors. The company is engaged in the development and operation of airports alongside power generation and highway development. A significant improvement in operational efficiency is seen, with debtor days dramatically reduced from 55.7 to 20.1. Despite historical challenges such as negative sales growth over the past five years and a high percentage of pledged promoter holdings, recent trends indicate a turnaround with a 35% growth in the trailing twelve months and a remarkable 74% increase in stock price over the last year. These metrics suggest potential for future growth and recovery.

4. HFCL Limited

HFCL Limited (Himachal Futuristic Communications Limited) stands as a compelling investment option for those interested in the telecommunications sector, particularly in infrastructure and manufacturing. Despite experiencing modest sales growth and a relatively low return on equity over the past few years, HFCL has demonstrated a robust stock price compound annual growth rate (CAGR), with increases of 34% over five years and 38% over three years, signaling strong market confidence.

Additionally, the company has shown an upward trajectory in profit growth, with an 11% increase over the last three years and a 10% growth in the trailing twelve months. These indicators suggest potential resilience and growth prospects in the evolving telecom industry.

5. Ircon International Limited

Ircon International Limited presents a solid investment opportunity, especially for those focusing on infrastructure sectors like railways and highways. Since its inception in 1976, IRCON has evolved into a key player in executing technologically complex projects. The company has demonstrated robust sales growth, with a remarkable 30% increase in the trailing twelve months and consistent profit growth, reflecting an 18% rise over the last three years.

Despite a slight decline in promoter holding, the firm maintains a healthy dividend payout of 37.6%. Moreover, IRCON’s impressive stock price CAGR of 68% over three years and an astonishing 188% over the past year highlight its strong market performance and potential for high returns.

Choose the Right Stock in the Infrastructure Sector

Investing in infrastructure stocks requires an overview and evaluation of the general economic situation, the role of the company within that arena, and its financial standing. Here are some factors to consider:

  1. Government Policies: Infrastructure development often aligns closely with government initiatives and policies.
  2. Economic Growth: Infrastructure spending is typically a reflection of economic health.
  3. Financial Health: Metrics like ROE, ROCE, and debt levels are crucial for assessing a company’s efficiency and financial stability.
  4. Market Dynamics: Understanding sector-specific challenges and opportunities is vital.

Conclusion

In conclusion, investing in infrastructure stocks offers a unique opportunity to participate in the growth of a country’s foundational sectors. However, making informed decisions requires a thorough understanding of various factors, including government policies, economic trends, company financials, and market dynamics.

By carefully evaluating these elements, investors can identify companies with strong potential for growth and resilience. Remember, while the prospects in infrastructure can be compelling, the associated risks must be diligently assessed to align with your investment strategy and goals.

FAQs

1. Which is the Best Infrastructure Stock in 2024 in India?

We have shared a list above of the best infrastructure stocks in India. Identifying the “best” infrastructure stock can depend on various factors, including financial performance, growth potential, and market conditions. Make sure to do your own research.

2. Are Infrastructure Stocks a Good Investment?

Infrastructure stocks can be a good investment, especially for those looking for exposure to the economic growth and development sectors. These stocks often offer the potential for stable dividends. These are also less susceptible to economic fluctuations compared to other sectors due to their involvement in essential services and long-term projects.

3. Which Infrastructure Stock Will Grow in 2024?

While we have discussed infrastructure stocks with strong fundamentals poised to grow in 2024, detailed analysis and monitoring of industry trends and individual company performance are recommended for making informed decisions.

LenDenClub is India’s largest alternate investment platform which started operations in India in 2015. We have been helping investors diversify their investments beyond traditional investment instruments ever since.


LenDenClub is India’s largest alternate investment platform which started operations in India in 2015. We have been helping lenders diversify their investments beyond traditional investment instruments ever since.

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