Best Infrastructure Stocks In India In October 2024 Based on 5Y CAGR

Infrastructure is a key enabler in helping India become a US $26 trillion economy. Investments in building and upgrading physical infrastructure, especially in synergy with the ease of doing business initiatives, remain pivotal to increasing efficiency and costs. The government’s focus on building the infrastructure of the future has been evident given the slew of initiatives launched recently. 

Best Infrastructure Stocks in October 2024 Based on 5Y CAGR

Note: The best infrastructure stocks lists have been selected from the Nifty 500 universe and sorted based on 5Y CAGR as of October 07, 2024.

Overview of Top Infrastructure Stocks in India

• IRB Infrastructure Developers Ltd

IRB Infrastructure Developers Ltd is an infrastructure development and construction company in India with extensive experience in the roads and highways sector. As of August 2024, the company’s total order book stood at ~₹33,600 crores, with an EPC order book of approximately ₹5,000 crores. The next two years’ executable order book, including EPC and O&M, is close to ₹7,000 crores. 

Key metrics: 

• Return on Capital Employed (ROCE): 8.96%
• Return on equity (ROE): 4.38%
• Ircon International Limited

Ircon International Limited (IRCON) is an integrated engineering and construction PSU specialising in large and technologically complex infrastructure projects in various sectors such as railways, highways, etc. As of June 30, 2024, the order book of the company stood at about ₹26,000 crores, wherein about 51% of orders are on a competitive basis and balance on the nomination. 

Key metrics: 

• ROCE: 16.4%
• ROE: 18.2%
• NCC Ltd

Incorporated in 1978, NCC Limited undertakes turnkey EPC contracts and BOT projects on a Public-Private Partnership basis. As of June 30, 2024, unbilled revenue stood at ₹4,719 crore as compared to ₹3,859 crore in March 2024, which is 25% of the turnover. 

Key metrics: 

• ROCE: 22.1%
• ROE: 11.4%
• GMR Infrastructure

GMR Infrastructure is mainly engaged in the development, maintenance and operation of airports, the generation of power, coal mining and exploration activities, development of highways, development, maintenance and operation of special economic zones, and construction business including Engineering, Procurement and Construction (EPC) contracting activities.

Key metrics: 

• RCCE: 6.41%
• ROE:  –
• NBCC (India) Limited

NBCC (India) Limited is a Government of India Navratna Enterprise under the Ministry of Housing and Urban Affairs. The Co. operates in three major segments – Project Management Consultancy, Engineering Procurement & Construction, and Real Estate. In August 2024, the company recorded an order book of ₹70,000 crores on a standalone basis. 

Key metrics: 

• ROCE: 32%
• ROE: 24.8%

Infrastructure Sector Outlook

Over the next 15 years, India will need to invest US$ 840 billion in urban infrastructure to keep up with its expanding population. For this investment to be successful and long-lasting, it must cover ongoing upkeep for airports, ports, buildings, and bridges. Metro and non-metro areas are becoming less different due to digitalization and opportunities in Tier II and III cities. The decentralization of IT, IT-enabled businesses, and financial institutions has contributed to an increase in demand for commercial real estate in these smaller cities. Residential launches and sales have also surged; in 2022, it is anticipated that leading cities will see over 3,60,000 unit sales.

Conclusion

The infrastructure sector boasts numerous growth opportunities as the government’s focus on building infrastructure of the future has been evident given the slew of initiatives launched recently. However, proper should be done before investing in the infrastructure shares.

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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.