Think of a developing nation as a moving train or a speeding car. Without solid tracks or smooth roads, the journey is bound to be bumpy, inefficient, and slow. For India, the story of progress is being rewritten with stronger rails and broader highways, ensuring this journey is seamless and swift.
A strong network of roads and railways isn’t just about moving people and goods; it’s the engine driving economic growth and connectivity. India’s government recognises this and is accelerating efforts to create a world-class transportation infrastructure.
In August, the Union Cabinet approved eight ambitious railway projects to enhance connectivity in eastern states with an investment of ₹246.6 billion. In November, the Cabinet approved three major multitracking projects across Indian Railways, totalling an investment of ₹79.3 billion. On the roads front, India’s Vision 2047 policy (becoming a developed nation by 2047) aims to stretch the national highways network to over 200,000 km by 2037, with high-speed, access-controlled highways at its core. These roads will not only cut travel time but also drastically reduce road accidents, aligning India with global standards of logistics efficiency.
As India accelerates its journey toward world-class rail and road infrastructure, certain companies stand out as key players in this transformation. Their established presence, proven track record, and robust order books position them to take on the monumental projects driving this expansion.
Let’s delve into three specific stocks that are at the forefront of this growth. With their strong foundation and capacity to handle large-scale projects, these companies are uniquely poised to capitalise on the massive opportunities in rail and road development.
Also read | Top 10 stocks to add to your watchlist for 2025
Larsen and Toubro (L&T)
L&T has cemented its position as a leading player in India’s road and railway infrastructure sectors. With a diverse portfolio that includes metro projects, expressways, and rail systems, L&T brings both scale and technical expertise to the table.
According to its latest earnings call for the fiscal second quarter (July-September), L&T reported a record order book of about ₹5.1 trillion, with 67% stemming from infrastructure projects.
L&T’s transportation infrastructure segment has demonstrated robust execution, with recent projects including portions of the Mumbai-Ahmedabad High-Speed Rail and multiple elevated corridors aimed at urban decongestion.
The railways segment continues to be a strategic focus for L&T, particularly with its participation in dedicated freight corridors and metro rail projects. The company is heavily involved in the Eastern and Western Dedicated Freight Corridors, projects expected to streamline freight operations and reduce logistics costs.
According to its integrated annual report for FY24, L&T’s expertise in executing rail electrification and complex track systems places it in a strong position to benefit from increased government allocations under Vision 2047.
On the road infrastructure front, L&T has been instrumental in constructing expressways and smart highways, including projects like the Meerut-Aligarh-Ghaziabad corridor. These initiatives align with the government’s plan to expand the national highway network.
Additionally, L&T’s projects increasingly incorporate smart technology such as digital monitoring systems, which enhance efficiency and safety.
L&T’s construction and mining machinery business is also expected to see significant growth. According to Arvind K. Garg, senior vice president, the segment is projected to grow by 20% in 2025-26 and double its sales over the next five years. This growth is supported by new product launches like the Komatsu PC35 mini excavator and increased investments in after-sales service capabilities.
Also read | Weight-loss drugs: A game changer for India’s top pharma companies
In parallel, L&T is diversifying into the aerospace and space sectors. The company is leveraging its 50-year relationship with the Indian Space Research Organisation (Isro) to expand into manufacturing launch vehicles and satellites. As per its Q2 disclosures, L&T is part of a consortium with Hindustan Aeronautics Ltd to manufacture the Polar Satellite Launch Vehicle (PSLV). The first launch, expected in 2025, will mark a significant milestone as India opens its space sector to private firms.
For investors, L&T’s integrated approach across sectors, coupled with its focus on high-margin projects and technological advancements, positions it as a resilient and forward-looking choice. Its diversified order book, strong execution capabilities, and alignment with government infrastructure initiatives make it a standout player in India’s growth narrative.
L&T’s current price-to-earnings (P/E) ratio stands at 36.8, significantly higher than that of other infrastructure companies. This elevated valuation suggests that the market is pricing in a strong growth trajectory and the company’s ability to maintain consistent profitability. However, the modest 2.6% rise in its share price over the past year indicates that the optimism embedded in its P/E ratio has not translated into immediate stock market gains. This time correction perhaps makes it a stock to watch for 2025.
View Full Image
GR Infraprojects
GR Infraprojects Ltd has built a strong reputation in the infrastructure space with its expertise in constructing national highways, expressways, and bridges, as well as its growing presence in railway projects, including rail overbridges and track-laying contracts.
Its strategic expansion into both sectors reflects its capability to deliver integrated transport solutions, positioning it as a key player in India’s infrastructure development drive.
GR Infraprojects continues to strengthen its role as a key player in India’s infrastructure development, contributing significantly to roads, railways, and power transmission. The company’s diversified portfolio demonstrates its strategic approach to capturing opportunities in these high-growth sectors.
As of September, the company reported an order book of ₹20,680 crore, with ₹13,300 crore allocated for ongoing execution and ₹4,130 crore awaiting appointed dates.
GR Infraprojects highlights progress across several projects, including highway engineering, procurement, and construction (EPC), and hybrid annuity model (HAM) projects. The company has also advanced metro and rail connectivity projects, which it sees as crucial for enhancing urban mobility and freight efficiency across states.
It has also strategically diversified into the power transmission sector, aligning with India’s target of achieving 500 GW of renewable energy capacity by 2030.
Also read | The best proxy to potentially profit from India’s health insurance boom
In September, GRIL raised ₹1,670 crore through Standard Chartered Bank to fund its greenfield power transmission projects. GRIL’s FY24 annual report highlights its long-term plans in power transmission, aiming to build a resilient network that supports the nation’s renewable energy goals. The company has successfully delivered other transmission projects within budget and on schedule, reinforcing its reputation in this emerging vertical.
GR Infraproject’s strategic presence in roads, railways, and power transmission positions it as a key beneficiary of India’s infrastructure and renewable energy ambitions. Its ability to execute complex projects across multiple domains, its financial discipline, and proven track record make it an interesting candidate to watch out during India’s road and railway expansion boom.
GR Infraprojects’ stock has rallied moderately over the past year, gaining 28.3%. While this reflects a healthy appreciation in its market value, its current price-to-earnings (PE) ratio of 15.6 suggests that the stock remains reasonably valued compared to peers in the infrastructure sector.
This PE level indicates that while the market acknowledges the company’s solid fundamentals it has yet to fully price in the GR Infraprojects’ long-term growth potential. The valuation offers room for potential share price upside, provided the company continues to execute effectively and leverage opportunities in its core and emerging sectors.
View Full Image
Ircon International
Ircon International is a prominent public sector undertaking with expertise in the railways and highways sectors, delivering large-scale and technologically advanced infrastructure projects. Founded in 1976 as a railway construction company, Ircon later diversified into highways and integrated projects, strengthening its multi-sectoral presence.
According to its Q2 investor presentation, Ircon had an order book of ₹24,250 crore as of 30 September, with railways contributing 78% and roads 22%. This reflects the company’s focus on delivering large-scale, technologically advanced projects, including electrification, signalling, and track-laying for railways and highways, bridges, and tunnels in the road sector.
Ircon’s FY24 annual report highlights the company’s long-term growth plans, which include diversifying into emerging sectors like renewable energy. Ircon is progressing with its 500 MW solar project, aiming to leverage its engineering expertise in the energy sector to enhance its revenue mix.
Also read | ICICI Securities, Motilal Oswal, JM Financial: Top stock picks for 2025
Additionally, the company is expanding its international footprint cautiously, targeting stable markets while mitigating geopolitical risks. The annual report states that Ircon plans to double its turnover in the next five to six years by securing larger, more complex projects.
Ircon’s strategy includes focusing on high-margin, niche projects such as tunnels and bridges, where competition is lower and operational margins remain steady. The company aims to secure ₹10,000-12,000 crore in new orders annually to align with the government’s infrastructure priorities under PM Gati Shakti and Vision 2047.
Over the past year, Ircon’s stock has rallied moderately, posting a gain of 22.4%. Despite this growth, its current price-to-earnings (PE) ratio of 21.4 suggests the stock is relatively fairly valued compared to its peers in the infrastructure sector.
View Full Image
Conclusion
Price is what you pay; value is what you get, Warren Buffett famously remarked. That is precisely the case with India’s infrastructure boom, as investments in railways and highways are not just expenses but milestones marking a transformation in the country’s economic future.
With a huge estimated outlay for railway projects and an ambitious plan to expand its road highways network, India is sowing the seeds for unparalleled connectivity and economic upliftment.
Beyond the expansion plans, this marks a shift towards environmental sustainability and efficiency in transport. Reducing 322 million litres of oil imports and about 900,000 tonnes of carbon emissions through railway expansions is equivalent to the amount of environmental impact through the planting of 35 million trees.
On the other hand, high-speed, access-controlled highways under Vision 2047 redefine logistics efficiency and safety as a comprehensive approach to infrastructure.
For investors, the opportunity lies in identifying companies poised to harness this momentum. Firms like Larsen & Toubro, GR Infraprojects, and Ircon International represent a suggestive list of stocks that Profit Pulse believes are well-positioned to grow, though this is not a conclusive or advisory recommendation.
Whether these companies can continue to deliver at this high level will be a key determinant on how they perform in the stock market.
For more such analyses, read Profit Pulse.
Note: We have relied on data from www.Screener.in, company investor presentations, earnings call transcripts, and annual reports throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Ekta Sonecha Desai has a deep interest in the equity markets. Combined with an analytical approach, she likes to dig deep into the world of companies, studying their performance and uncovering insights that bring value to her readers.
Disclosure: The writer and her dependents do not hold the stocks discussed in this article.
