Road infrastructure companies reported mixed performance in Q1FY27, with revenue growth remaining under pressure despite improved profitability. According to Axis Securities, companies under its road infrastructure coverage recorded 3% year-on-year decline in revenue, compared with its expectation of 1% growth, largely due to slower project execution at HG Infra Engineering. EBITDA rose 6% YoY, below Axis Securities' estimate of 9%, reflecting subdued sales volumes. However, PAT jumped 47% YoY, significantly outperforming the brokerage's 10% growth expectation, aided by exceptional items reported by PNC Infratech and KNR Construction.
The construction equipment industry is facing significant cost pressures that are affecting infrastructure project execution. Bitumen prices have surged from ₹40,000-45,000 per tonne to nearly ₹80,000 per tonne, though they have since eased to around ₹75,000 per tonne this month. Steel prices have also increased substantially, creating challenges for contractors who bid on projects before the commodity price escalation. According to Shalabh Chaturvedi, Vice President of the Indian Construction Equipment Manufacturers' Association, these developments have prompted the industry to lower its FY27 growth outlook to single digits from earlier expectations of double-digit growth. The industry recorded total sales of 1,36,995 units in 2025-26, compared with 1,40,191 units in the preceding financial year, representing a decline of approximately 2%.
Execution delays continue to plague the road infrastructure sector, with about half of under-construction roads facing delays of over 12 months. An India Ratings and Research analysis of 199 ongoing projects shows over 50% of projects, with a total award cost of ₹90,000 crore, are delayed. Companies like KEC (₹6,300 crore), HG Infra (₹5,600 crore) and KPIL (₹5,300 crore) reported good inflows, while GR Infra (nil) and Ahluwalia Contracts (₹500 crore) had slower inflows. EBITDA margins for KNR and HG Infra dropped 740 basis points and 530 basis points YoY, respectively, while Ceigall and KPIL had margin expansion of 200 basis points and 40 basis points YoY respectively.
Axis Securities has identified Kalpataru Projects International, RITES and GR Infraprojects as its top conviction infrastructure picks, maintaining 'Buy' ratings on all three companies. The brokerage remains bullish on their strong order books, robust revenue visibility, diversified project pipelines and healthy growth prospects, with execution momentum and financial strength expected to support long-term value creation.
Axis Securities has retained its 'Buy' recommendation on Kalpataru Projects International with a target price of ₹1,500, naming the company among its top conviction ideas in the non-road infrastructure space. The brokerage sees strong revenue visibility, supported by an order book of ₹66,607 crore as of 30 June 2026, along with an additional L1 pipeline of ₹7,500 crore. According to Axis Securities, the diversified order book, led by transmission and distribution, buildings and factories, water, oil and gas, railways and urban infrastructure, provides a strong platform for growth. The brokerage expects the company to deliver a 15% revenue CAGR over FY26–FY28E.
RITES secured 128 new orders worth ₹674 crore in Q1FY27, taking its order book to a record ₹9,450 crore. According to Axis Securities, the balanced mix of turnkey projects and consultancy assignments provides a strong foundation for long-term growth. The brokerage expects export execution, including the ₹900 crore Bangladesh coach order, to accelerate from Q2FY27. GR Infraprojects had an order book of ₹25,319 crore as of 30 June, spanning highways, roads, railways, transmission, telecom and tunnel projects. Management has guided for 15%–20% revenue growth in FY27, with revenue targeted at ₹11,000–₹12,000 crore by FY28.
