Budget 2024: Infra stocks to watch out amid government’s focus on development

The first budget of the Modi 3.0 government is widely expected to enhance allocations for infrastructure development in road, transport, railways, and other sectors. Amid the high speculations of the government's focus on infrastructure development, all eyes will be on Finance Minister Nirmala Sitharaman as she presents her seventh Union Budget on July 23.

In February, the finance minister's Interim Budget increased the allocation by 16.9% to ₹11.1 lakh crore for FY 2024-25 infrastructure development compared to revised estimates for FY 2023-24.

The government's revenue and tax receipts have risen in the last year. The ₹2.1 lakh crore booster from the Reserve Bank of India in dividend payment for FY24 has bolstered the new government's financial position.

The enhanced fiscal position has raised hopes of higher allocations for infrastructure sectors. The D-street is expected to keep a keen eye on infrastructure shares ahead of Budget 2024.

The full budget for 2024-25 is likely to focus on the highways, transport, and construction sectors, as the government wants to promote employment generation and economic growth. These expectations have focused on infra shares like Larsen & Toubro, KEC International, RITES, and others.

Here is the list of key infrastructure shares that investors should watch out for ahead of the Budget.

Larsen & Toubro

The diversified group has reported steady financial results. Its subsidiaries such as LTIMindtree, and L&T Technology Services have reported healthy growth.

L&T reported a 21% year-on-year growth in consolidated revenue at ₹ 2.21 lakh crore in FY24 while its net profit stood at ₹ 13,059 crore, registering a 25% YoY growth. L&T shares have gained 3.15% so far in 2024, but have risen nearly 48% in the past one year.

IRB Infrastructure

IRB Infra and its entities collectively registered a 35% year-on-year growth in toll collections at ₹517 crore in June 2024, compared to ₹383 crore in June 2023. The toll revenue of the group entities in Q1FY25 stood at ₹1,556 crore, a 32% rise from ₹1,183 crore in the year-ago quarter.

The infrastructure firm reported a consolidated net profit of ₹188.9 crore in Q4FY24, up 45.1% YoY, while revenue increased 27.2% to ₹2,061.2 crore. IRB Infra shares have gained more than 64% this year so far while in the past year the stock has given returns of 163%.

Adani Ports & SEZ

The Adani group company is likely to remain in focus amid the government push for ports-led development. Government programmes on improving port connectivity and facilities under the Gati Shakti programme are likely to benefit Adani Ports. Moreover, greater scale and diversification would also aid the company’s earnings growth and cash flow.

Adani Ports reported a 76% surge in consolidated net profit at ₹ 2,040 crore for the quarter ended March 31, 2024, compared to ₹1,158 crore in the year-ago period. The company’s revenue from operations stood at ₹6,897 crore in Q4FY24, up 19% compared to ₹5,797 crore in the same quarter of FY23.

Adani Ports shares have gained up to 45% in 2024 so far. The stock has given returns of 105% in the past year.

KEC International

As of March 31, 2024, the company’s order book, including the lowest bidder (L1) projects, stood at ₹37,000 crore.

KEC International reported a healthy growth in revenue and net profit in FY24. The company’s consolidated revenue increased to ₹19,914 crore for the financial year ended March 31, 2024, against ₹17,282 crore in the preceding financial year. Its consolidated net profit nearly doubled to ₹347 crore in FY24 against ₹176 crore in FY23.

KEC shares have rallied 46% in 2024 so far and 48% in the last one year.

Titagarh Rail Systems

Titagarh shares have rallied 61% this year so far while in the past one year, the stock has given multibagger returns of 222% on consistent order flows. The rail coach manufacturer’s order book as of the March 31, 2024 quarter stood at ₹28,100 crore.

The company’s consolidated net profit increased 64.5% to ₹79 crore in the March quarter compared to ₹48.2 crore in the year-ago period. Revenue from operations jumped 8% to ₹1,052.4 crore in Q4FY24 against ₹974.2 crore in Q4FY23.

In addition to these shares, railway stocks such as RVNL, IRCON International, and RITES will remain in focus amid the presentation of the Budget for FY 2024-25. Infra push will also put stocks like PNC Infratech, Ultratech Cement, Dalmia Bharat, KNR Construction, Ahluwalia Contracts, and Tata Power in the limelight.

Increased spending on the defence sector may also benefit defence stocks such as Hindustan Aeronautics, Cochin Shipyard, BEL, and Mazagon Dock Shipyard.

HUDCO would also be in focus amid the government’s programme on housing for all.