5 Best Road and Highway Stocks in India

Roads and highways are an integral part of a country’s infrastructure, connecting cities, towns, and businesses. This sector has good opportunities for investors who want to capitalize on infrastructure development as governments worldwide continue to invest heavily into both road and highway network expansion, as well as their maintenance. Companies in this sector are vital for economic growth, and investing in their road and highway stocks can be a great way to diversify your investment portfolio.

In this blog, we will discuss the best road and highway stocks in India, along with the benefits and risks of investing in them.

What are Road & Highway Stocks?

Road & highway stocks are shares of companies that build, maintain, and operate roads and related infrastructure. These companies usually manage large infrastructure projects funded by the governments or through public-private partnerships. Road and highway companies generate revenue mainly through toll fees, long-term lease agreements, and government contracts. Investors who select road and highway stocks can enter the infrastructure market because its stable growth results from rising urban development and transportation needs.

List of the Best Road & Highway Stocks

• Larsen & Toubro Ltd.
• GMR Airports Ltd.
• IRB Infrastructure Developers Ltd.
• Engineers India Ltd.
• H.G. Infra Engineering Ltd.

Market Information 

Company	Current Market Price (In ₹)	Market Capitalization (In ₹ Crores)	52-Week High (In ₹)	52-Week Low (In ₹)
Larsen & Toubro Ltd.	3,441	4,73,253	3,964	3,141
GMR Airports Ltd.	77.3	81,589	104	67.8
IRB Infrastructure Developers Ltd.	46.4	28,003	78.2	41
Engineers India Ltd.	161	9,055	304	142
H.G. Infra Engineering Ltd.	1,082	7,053	1,880	928

Read Also: List of Best Infrastructure Stocks in India

Overview of the Top 5 Road & Highway Companies 

An overview of the top 5 Road & Highway companies is given below:

1. Larsen & Toubro Ltd.

Larsen & Toubro (L&T) operates as a prominent Indian multinational corporation that demonstrates excellence across engineering, construction, manufacturing, and technology domains. L&T began operations in 1938 and has developed an established brand identity across infrastructure, power generation, defense operations, hydrocarbon exploration and production, and financial services areas. The company has experienced significant growth since its establishment in 1938, and it continues to develop multiple industries while boosting national development. L&T undertakes challenging highway projects and develops metro systems and power plants, establishing its reputation for creating advanced world-class infrastructure solutions. The organization operates in over 50 countries, supporting both infrastructure expansion and industrial progress.

Know the Returns:

1Y Return (%)	3Y Return (%)	5Y Return (%)
-11.22%	91.59%	332.04%

2. GMR Airports Ltd.

GMR Airports Limited operates as a global airport developer and operator that belongs to the GMR Group. The company operates essential Indian airports, including Indira Gandhi International Airport in Delhi and Rajiv Gandhi International Airport in Hyderabad. GMR Airports Limited maintains its operations across international markets, which include the Philippines, Indonesia, and Greece. The company constructs airport infrastructure equipped with world-class facilities and delivers exceptional maintenance services while maintaining superior operational standards. GMR Highways Ltd. is a subsidiary of GMR Airports, which has completed 3 highway projects featuring 888 km of road infrastructure.

Know the Returns:

1Y Return (%)	3Y Return (%)	5Y Return (%)
-5.59%	99.90%	388.97%

3. IRB Infrastructure Developers Ltd.

IRB Infrastructure Developers Limited operates as a leading infrastructure development company throughout India, specializing in road and highway development and management. IRB Infra was established in 1998 to enhance the country’s transportation system through public-private partnerships (PPP). IRB Infrastructure Developers Limited operates on the Build-Operate-Transfer (BOT) business model. The company focuses on innovation and sustainability alongside infrastructure expansion throughout India. The infrastructure sector recognizes the company for its strong capabilities in project execution, along with financial management and operational excellence. 

Know the Returns:

1Y Return (%)	3Y Return (%)	5Y Return (%)
-24.07%	77.60%	812.11%

4. Engineers India Ltd.

EIL is India’s leading public sector engineering company, providing engineering procurement construction (EPC) services across oil, gas, petrochemicals and infrastructure segments.  EIL was established in 1965 to provide complete project-related services from initial idea through commissioning and execution. The company has been involved in the design and supervision of two and four-lane road projects and bridges. Moreover, the company has been responsible for quality audits of 71 projects of NHAI. Through its commitment to innovation along with sustainability and quality, EIL boosts Indian economic development through infrastructure growth. 

Know the Returns:

1Y Return (%)	3Y Return (%)	5Y Return (%)
-23.15%	143.30%	177.16%

5. H.G. Infra Engineering Ltd.

H.G. Infra Engineering operates as a major Indian construction and infrastructure development enterprise that specializes in civil engineering services. The company was established in 1989 as a developer of highway networks, road and bridge systems and other urban development projects. Quick and smooth delivery of high-quality construction along with project management excellence represent the competitive advantage for H.G. Infra Engineering. The company operates in India’s leading market by carrying out projects for the National Highways Authority of India (NHAI), Delhi Metro Rail Corporation (DMRC), Adani Group, Tata Group, etc. The company’s corporate office is in Jaipur.

Know the Returns:

1Y Return (%)	3Y Return (%)	5Y Return (%)
8.44%	87.12%	563.65%

Key Performance Indicators

Company	Operating Margin (%)	Net Profit Margin (%)	ROE (in %)	ROCE (in %)	Debt-to-Equity
Larsen & Toubro Ltd.	10.84	7.04	15.12	14.7	1.32
GMR Airports Ltd.	22.30	-12.02	0	4.74	-16.3
IRB Infrastructure Developers Ltd.	42.24	12.42	4.4	7.63	1.36
Engineers India Ltd.	14.66	10.97	19.74	20.91	0
H.G. Infra Engineering Ltd.	17.45	10	21.93	25.55	0.61

Benefits of Investing in Roads & Highways Stocks 

Investing in road & highway stocks offers several benefits, including:

• Stable Revenue: Toll-operated roads and highways can be an effective mechanism for generating consistent revenue streams, effectively ensuring a cash flow for the companies involved in their operation and maintenance.
• Government Support: Infrastructure development has become a top priority for governments, which eventually results in beneficial policies and subsidies along with increased funding.
• Public-Private Partnerships: The government works together with private companies through Public-Private Partnerships to obtain funding and decrease project risks for large-scale ventures.
• Dividend Income: Investors who seek passive income through dividend payments should consider investing in infrastructure companies since these companies frequently offer dividends. Investors who receive these dividends often use them to reinvest for additional returns over time.
• Portfolio Diversification: Portfolio diversification is an essential investment strategy, especially in today’s fluctuating market conditions. Infrastructure stocks play an important role in this approach as they provide a degree of stability that can reduce overall portfolio volatility, which can ultimately
• help create a more resilient portfolio in the long term. 

Read Also: List Of Best Logistics Stocks in India

Risks of Investing in Road & Highway Stocks 

Investing in road & highway stocks can give high returns but pose some risks that investors should take into consideration before making any investment decision. Some of these risks are:

• Regulatory Changes: The profits and timeline of the projects can be impacted by unexpected events, such as changes in government policies, toll regulations, and legal disputes. Therefore, it is suggested that the investors must carefully analyze the company’s ability to adjust to evolving conditions.  
• High Capital Expenditure: Road & highway projects require large initial capital spending, which can lead to significant debt and financial strain on the company.
• Traffic Volume Uncertainty: This impacts the income from the toll road, as the number of vehicles using the road on a daily basis can fluctuate because of economic downturns, rises in fuel prices, or alternate routes.  
• Construction Delays: Construction delays triggered by bad weather, together with the shortage of labor and supply chain problems, lead to unnecessary increases in project costs.
• Maintenance and Operational Costs: Timely renovation is essential to ensure that the road remains safe and functional. Additionally, highway projects take years to become operational and give returns, which makes them unsuitable for short-term investors. 

Conclusion 

Road and highway stock investments can give investors decent returns because of favorable government policies. These companies have stable revenues from toll operations and public-private partnerships. Investing in Road and Highway stocks can also be risky, even though they offer profitable opportunities. The investors must examine the project timelines, financial health, and operational history of the company before making any investment decision. Highway stocks provide capital appreciation in the long term and diversification to investment portfolios. However, it is essential to consult your financial advisor before investing. 

Frequently Asked Questions (FAQs)