Infra's exploding: Nifty Infra beats Nifty50 by 2X and it's just the start

Managers expects infra-linked sectors to see robust growth over FY26-FY30, as stable order books, and strong free-cash-flow generation drives the sector

India’s infrastructure sector is entering a once-in-a-generation expansion phase, according to investment managers on smallcase, with equities in the space now emerging as a high-alpha wealth-creation theme rather than a defensive play.

 

Data shared by managers highlights the scale of the shift: the Nifty Infrastructure Index has delivered 82.8% returns over the past three years, nearly double the Nifty 50’s 41.5%, firmly establishing infra as one of the strongest market performers since 2023. Over five years, Nifty Infra has returned 181.2%, compared with the Nifty 50’s 100.3%.

 

Investment managers said this outperformance is not a one-off but the beginning of a multi-year infra supercycle from FY26 to FY30, supported by record government spending, a revival in private capex, and India’s accelerating push into green energy and digital infrastructure.

 

What’s driving the Infra supercycle?

 

Analysts point to a structural, multi-layered transformation underway:

 

1. Record Government Capex

 

FY25 saw a historic ₹11.11 lakh crore in capital expenditure, with ₹11.21 lakh crore already guided for FY26 — around 3.1% of GDP. This is the highest infra spend in independent India.

 

2. Private Capex Revival

 

Private investment is being revived by:

 

PLI schemes, global supply-chain diversification, manufacturing incentives, and rising confidence in India’s logistics and energy ecosystem.

 

3. High Multiplier Effect

 

Managers estimate every ₹1 spent on infrastructure adds ₹2.5–₹3 to India’s GDP, making infra one of the strongest economic multipliers

 

4. Order Books and Free Cash Flow Strengthening

 

Across roads, construction, industrials, cement, power equipment and logistics, companies are reporting:

 

• multi-year visibility on order books
• improving free-cash-flow generation
• declining leverage
• stronger execution capabilities
• Analysts expect this trend to hold through FY30.

 

Why Investors Should Care Now

 

Investment managers across smallcase agree: infra is now a long-duration, thematic opportunity that should have a place in every diversified portfolio.

 

InvITs: The New Income Engine

 

Abhishek Banerjee, founder of LotusDew and smallcase investment manager, expects InvITs (Infrastructure Investment Trusts) to manage ₹25 lakh crore in assets by 2030.

 

"This expansion is underpinned by predictable, contract-based revenue streams that usually provide pre-tax yields of around 10–12% and post-tax returns of roughly 7–9%, generally higher than many conventional fixed-income instruments. Although these assets can experience temporary fluctuations during periods of market uncertainty, their historical volatility of about 10.2% is well below the equity market’s 15.4%, resulting in comparatively steadier performance. With a correlation of only 0.42 to equities, infrastructure platforms tend to behave similarly to utilities, producing consistent, inflation-linked income that is largely unaffected by economic swings," said Banerjee.

 

Infra as a Structural Market Theme

 

Pankaj Singh, founder of SmartWealth.ai, says infrastructure has “transitioned from a cyclical trade to a structural growth engine aligned with India’s 2047 ambitions.”

 

Supercycle Supported by Government + Private Sector

 

 “India is currently witnessing an 'Infrastructure Supercycle', powered by a record ₹11.11 lakh crore government capital expenditure (capex) budgeted for FY25 and further supported by FY26 capex guidance of ₹11.21 lakh crore. The country is transitioning from basic connectivity creation to building advanced, integrated logistics ecosystems supported by digital infrastructure, advanced mobility networks, and sustainable energy corridors," said Rakesh Pujara, Investment manager on smallcase, Founder and Managing Partner at Compounding Wealth Advisors LLP.

 

"India’s infrastructure ecosystem is at a historic inflection point, powered by record government capex, a decisive revival in private investment, and forward-looking reforms. Traditional assets—roads, ports, airports, power—are scaling rapidly, while new-age sectors such as green hydrogen and data centres are emerging as strategic national priorities. For equity markets, infrastructure has clearly transitioned from a cyclical opportunity to a structural, long-duration growth theme aligned with India’s ambition of becoming a top-three global economy by 2047. We can expect Infra to remain a dominant market theme for the rest of the decade.”

 

Where the Money Is: Key Infra Sectors for Investors

Key Infra Sectors:

 

Highways & Roads

India’s road infrastructure remains the backbone of the capex cycle, with the national highway network reaching 146,342 km and annual construction consistently above 10,000–11,000 km, supported by Bharatmala, expressway corridors and strong NHAI execution. Funding visibility is stable through HAM, PPP, TOT and fast-growing road InvITs that have monetised over ₹70,000 crore. Rising order books, predictable government capex and a deep pipeline under Vision 2047 continue to benefit EPC/HAM developers, cement and steel suppliers, equipment OEMs, toll operators and asset managers.

 

Airports & Aviation

India’s aviation ecosystem is expanding at one of the fastest global rates, with operational airports rising from 74 in 2014 to 163+ in 2025, backed by UDAN, greenfield expansions and AAI asset monetisation. Passenger traffic has rebounded sharply, crossing 150 million domestically and 202 million overall (Apr–Sep 2025). With a long-term target of 350–400 airports by 2047, rising non-aero revenues, airport privatisation and cargo/MRO growth, the opportunity set broadens for airport operators, terminal services, retail concessions, fuel suppliers and maintenance ecosystems.

 

Seaports, Maritime & Logistics

 

Sagarmala-driven reforms have reduced turnaround times and boosted throughput, with major ports handling ~795 MT in FY24 and all-India capacity targeted beyond 3,300 MTPA by 2025. Logistics, a US$317 billion market in 2024, is projected to reach US$484 billion by 2029 (CAGR 8.8%) on multimodal integration, mechanisation, coastal shipping and DFC-linked efficiency gains. Port-led industrialisation, a ₹25,000 crore Maritime Fund, and logistics parks continue to lift prospects for port operators, container terminals, integrated logistics firms, warehousing, cold-chain and hinterland transport players.

 

Energy & Power (including Renewables)

 

India’s power sector is undergoing a major transition, with total capacity at 476 GW (June 2025) including 180 GW+ renewables, and a 2030 target of 500 GW non-fossil. Rising demand (6–7% CAGR), peak load nearing 249 GW, and investments in transmission corridors, smart grids, hybrid parks and storage systems are creating long-duration order visibility. Policy support through PLI schemes, RE parks and early hydrogen pilots is driving growth for renewable EPCs, turbine/inverter makers, transmission utilities and battery-storage developers.

 

Data Centres & Digital Infrastructure

 

India’s data-centre capacity has surged from ~350 MW (2019) to 1,030 MW (2024) and is on track for 1,700 MW by 2025, supported by cloud adoption, AI/ML workloads, data localisation and hyperscaler expansion. The sector, valued at ₹89,482 crore in 2025, is projected to double by 2030 with rising power demand (expected to reach 8 GW), high utilisation levels and strong state incentives. Beneficiaries include DC developers, real-estate platforms, power and cooling suppliers, fiber providers and interconnect ecosystems. 

 

Green Hydrogen & Emerging Fuels

 

With a 5 MTPA target by 2030, India’s National Green Hydrogen Mission is accelerating early investments, electrolyser manufacturing and industrial pilots across steel, refineries and fertilizers. Backed by ₹19,744 crore support and 125 GW renewable-linked pipelines, the sector is moving from pilot to scale, with 158 projects (11.2 MMTPA) already in the pipeline. Long-term potential of $30–40 billion and export-led opportunities to Europe/Asia position electrolyser makers, renewable-hydrogen developers, catalyst suppliers and port-based export nodes for multi-year growth.

 

What This Means for Your Portfolio

 

Investment managers on smallcase recommend:

 

• Include infra as a long-term thematic allocation
• Given the visibility till FY30 and low correlation with other sectors.
• Blend equities + InvITs
• For both growth and stable income.
• Prefer leaders with strong balance sheets
• Execution capability and cash flows matter far more than valuation in infra cycles.
• Stay invested for 5+ years
• Infrastructure cycles compound slowly but steadily.