L&T, GR Infra: Road infra-linked stocks decline; Nuvama remains cautious

L&T, PNC Infra: Road infrastructure related companies' stock declined in trade today after Nuvama took a "cautious" stance as it sees headwinds ahead

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Road infrastructure-related stocks largely declined in trade on Tuesday, July 1, 2025. At 2:18 PM, among others, Larsen & Toubro (L&T) was down 0.09 per cent, Dilip Buildcon down 1.21 per cent, PNC Infrastructure down 0.58 per cent, KNR Constructions down 1.34 per cent, Afcons Infrastructure down 1.03 per cent, and G R Infraprojects shares slipped 2.08 per cent. Overall, the scrip slipped up to 2 per cent. 

 

According to a report by Nuvama Institutional Equities, the firm remains "cautious" on the road infrastructure space due to ongoing challenges. Here are some reasons why Nuvama believes the sector faces headwinds ahead:  FOLLOW STOCK MARKET UPDATES LIVE

Continuous decline in road awards

According to Nuvama, the road sector in India is facing significant challenges as the National Highways Authority of India (NHAI) awards continue to decline.

 

NHAI awarded new road projects spanning 13 km in June 2025 against 102 km awarded in May 2025. In June 2024, the awards were nil. Cumulatively, in Q1FY26, 115 km across nine projects were awarded, however, nil projects were awarded in Q1FY25 due to the imposition of the Model Code of Conduct owing to the general elections.

 

The NHAI awards’ value was at ₹47,000 crore in FY25 as against ₹35,000 crore in FY24, which was lower than previous years ₹1.5 trillion in FY22 and ₹1.3 trillion in FY23.

Mixed performance in road construction

While road awards have slowed, road construction activity has continued at an increased pace, with 404 km of roads completed in June 2025, a 14 per cent increase year-on-year (Y-o-Y). However, the FY25 road construction total was still down by 15 per cent Y-o-Y, completing 5,614 km, despite surpassing its target by 9 per cent.

 

The NHAI surpassed its FY25 road construction target by 9 per cent and constructed 5,614 km of roads in FY25. Nevertheless, road construction by the NHAI in FY25 was down 15 per cent Y-o-Y due to muted awards over the past few years.

What is the way ahead for road infrastructure companies? 

Looking ahead, Nuvama believes the lack of increase in road capex in the FY26 budget and the halt in the Bharatmala programme are expected to keep road awards subdued in the near term. 

 

The market share of listed road developers, according to Nuvama, is shrinking, and diversification of road infrastructure companies' portfolios is significant since their ability to win adequate road orders at desired margins is now under question.

 

In the NHAI awards, listed developers’ market share which plunged from 61 per cent over FY16–18 to 31 per cent over FY19–21 and 25 per cent over FY22–24, further decreased to 24 per cent in FY25.