Best Infrastructure Stocks to Consider in NSE India (2024)

What are Infrastructure Stocks?

Infrastructure stocks represent companies involved in the development, construction, maintenance, and operation of essential public systems and facilities. This includes companies dealing in roads, airports, railways, energy, telecommunications, water, payments and waste management. Such stocks expose investors to the building blocks of a nation’s economic development, making them a unique investment choice.

Types of Infrastructure Stocks in India

Infrastructure stocks in India cover a broad spectrum, mainly categorised into the following:

1. Transportation: Companies that manage roadways, highways, railways, ports, and airports.
2. Utilities: This includes companies that provide electricity, natural gas, and water.
3. Energy: Stocks of companies engaged in energy production, including renewable and non-renewable sources.
4. Telecommunications: Providers involved in telecommunications infrastructure, like mobile towers and fibre networks.
5. Construction and Engineering: Firms engaged in building and designing infrastructure projects.

Key Features of Infrastructure Stocks

1. Capital Intensive: These companies, including the top 10 infrastructure stocks to buy, require high capital for project development and maintenance.
2. Government Influence: Infrastructure often aligns with government policies, impacting profitability and growth.
3. Long-term Returns: Infrastructure projects typically have long payback periods, yielding returns over extended durations.
4. Inflation Hedge: Due to their essential nature, infra related stocks can adjust infrastructure share prices with inflation, offering some protection against economic downturns.

How to Invest in Infrastructure Stocks in India?

Here is how you can invest in infrastructure stocks to buy in NSE:

1. Open a demat/trading/stockbroker account. You can open a demat account with smallcase!
2. Conduct thorough research into the top infra stocks in India that are of interest to you. Investors can use tools like the Tickertape Stocks Screener to do this. The screener offers 200+ built-in filters to choose from, and investors can choose the parameters to research and generate different infrastructure stocks lists with infrastructure share prices. 
3. Place a ‘Buy’ Order on the top infra stocks of your choosing.

How to Select the Best Infrastructure Stocks to Buy?

Here are a few things to consider when selecting the best infra stocks in India:

1. Financial Health: You can assess the company’s debt levels, revenue, and profitability.
2. Project Pipeline: Companies on infra share lists with a steady project pipeline have better growth potential. Investors can thoroughly research a company to determine its project pipeline before investing.
3. Government Policies: Infrastructure development often aligns with government policy changes, which can impact returns.

Who Should Invest in Infrastructure Stocks?

Infrastructure stocks can be suitable for:

• Long-Term Investors: Due to their long gestation periods, infrastructure stocks can suit those with a long-term investment horizon.
• Income Investors: Infrastructure stocks often provide consistent dividends. Thus, investors seeking regular dividends can find these stocks attractive.
• Risk-Tolerant Investors: These government infrastructure stocks can be affected by political and regulatory changes, making them suitable for those who have moderate to high-risk tolerance.

Benefits of Investing in Infrastructure Stocks in India

1. Growth Potential: India’s focus on infrastructure development makes this sector highly promising.
2. Income Generation: Infrastructure companies typically offer dividends, providing additionally a passive income stream.
3. Economic Stability: Infrastructure assets provide critical services, making them essential irrespective of economic cycles.

Risks of Investing in Infrastructure Stocks

1. Regulatory Risks: Changes in government policies can impact project timelines and profitability of even the best stocks in infrastructure sector.
2. High Debt Levels: Infrastructure projects are capital-intensive, often leading to high debt levels.
3. Project Delays: Delays in project completion can impact revenue generation of even the best stocks in infrastructure sector.
4. Interest Rate Sensitivity: These infra sector stocks can be affected by interest rate changes, as high rates increase borrowing costs.

Factors to Consider When Investing in Infrastructure Stocks

1. Debt-to-Equity Ratio: Companies with manageable debt are less vulnerable to interest rate fluctuations.
2. Dividend Yield: High-yield stocks provide a steady income, benefiting income-focused investors.
3. Government Contracts: Infrastructure companies with government contracts tend to have steady revenue streams.
4. Environmental Impact: Sustainable infrastructure development is increasingly important, affecting project approvals and timelines.

To Wrap It Up…

Infrastructure stocks represent a significant opportunity for long-term investors, especially with India’s aggressive infrastructure development. While they can offer steady income and growth potential, they also carry unique risks due to regulatory influence, high debt requirements, and long project timelines. By evaluating financial health and project pipelines and aligning them with long-term economic growth, investors can make informed decisions in this promising sector. However, it is also important to conduct thorough research and consult a financial advisor when investing in these stocks.