Infrastructure players poised to benefit from strong order momentum

Despite delays, FY26 budget supports ₹11.2 trillion capex with strong order pipeline in power, transport and real estate

One of the side effects of the general elections was government tenders slowing down. Activity across Infrastructure sectors suffered.

 

Infra activity started to recover in H2FY25 followed by another slowdown due to unseasonal rains in H1FY26.

 

The FY26 Budget remains supportive with allocations being maintained. Cumulative year to date (YTD) FY26 capex remains 33 per cent higher year-on-year (Y-o-Y).

 

To achieve FY26 budgeted capex of ₹11.2 trillion, another ₹7.7 trillion must be generated in the next eight months. The trends show roads contracting 15 per cent Y-o-Y (35 per cent share), railways expanding 9 per cent Y-o-Y (33 per cent share), and defence posting 67 per cent Y-o-Y growth (10 per cent share).

 

Materials like cement, steel, copper and other industrial metals could see rising offtake.

 

Margins will be good since global commodity prices are low. Aluminum, zinc, rebar prices have eased since March 2025 while copper has been flat. Risks and concerns include slowdowns in execution, rise in commodity prices, increases in receivables and working capital, and increase in promoter pledges, among others.

 

There’s strong revenue visibility with many projects. For example, take transmission and distribution (T&D) projects which will benefit companies like KEC International (KEC) and Kalpataru Projects International (KPI). Projects worth nearly ₹70,000 crore have been recommended by the National Committee on Transmission (NCT) to the Ministry of Power in the last six months.

 

The addressable market for transmission projects stands at ₹1-1.5 trillion over the next 1-1.5 years with 45 TBCB (tariff based competitive bidding) projects. Execution timelines are between 24 and 54 months.

 

Power Grid Corporation (PGCIL) is looking for a market share of 50-60 per cent in overall TBCB tendering. PGCIL has outlined a capex of ₹28,000 crore for FY26. Adani Energy Solutions, Resonia (formerly Sterlite Power), and Tata Power are in the fray, with new entrants like Reliance Industries, D R Agarwal Infracon, KCC Buildcon and Torrent Power.

 

Apart from transmission, HVDC projects, such as KPS III HVDC Transmission (Khavda-South Olepad HVDC) and Leh-Ladakh HVDC project may soon be bid out. 

 

KPI has traction in transmission with order inflows worth ₹10,200 crore (FY23), ₹11,200 crore (FY24) and ₹14,500 crore in FY25. T&D apart, KPI may capitalise on metro systems, elevated corridors, and tunnelling. It may also gain from large oil and gas projects in the Middle East. KPI could see mid-teens revenue growth over FY25-28.

 

The KEC management sees order momentum, ensuring revenue visibility for the next 18-24 months.

 

Strong outlook also exists in railways, roads, manufacturing, and real estate. Those sectors have generated around ₹26.1 trillion in orders (until August 31, 2025). For example, NHAI announced 18 expressways with an outlay of ₹27,500 crore.

 

Tendering also remained strong at ₹6.8 trillion, up 46 per cent Y-o-Y, led by real estate, power distribution, and roadways. But project awards declined 18 per cent in YTDFY26, with August seeing 30 per cent Y-o-Y fall.

 

Management commentaries suggest awards could pick up in H2FY26. Ahluwalia, PNC and KNR have achieved 50 per cent of FY26 inflow guidance by August 2025. Infra players such as NCC and HG Infra, and specialised industrial players like Bhel, Siemens, and Hitachi Energy could benefit.

 

Apart from new road and railway projects, manufacturing contributed with activity in metals, cement, and solar modules & cells. Electricity saw hydropower projects by Navayuga Engineering, NHPC, Avaada (pumped storage and batteries), and GSC (pumped storage), totalling ₹24,700 crore.

 

In tendering, real estate led with a robust 105 per cent Y-o-Y increase, followed by power distribution (up 80 per cent) and roadways (up 65 per cent).

 

The low base is contributing to the rebound. Project awards stood at ₹2.8 trillion till August 2025. Real estate led with ₹42,200 crore in awards, followed by railways at ₹35,400 crore with key projects, including the National High-Speed Rail order to L&T and BEML receiving a contract for LHB coaches.