Despite the completion of major central and state elections, government capital expenditure and project awards remain sluggish. The National Highways Authority of India (NHAI) continues to postpone bids despite a strong pipeline. Notable BOT projects in Assam and MP, valued at Rs. 70/40 billion, have faced submission delays. Water projects under JJM have stalled, affecting EPC players revenue growth in Q3 FY25.
Renewable Energy and Capital Goods Sector
The renewable power sector is emerging as a significant long-term investment theme alongside defence and power security. HVDC projects worth Rs. 1.2 trillion are anticipated over the next two years, split between EPC (45%) and equipment players (55%). Underinvestment in T&D equipment capacity has created strong pricing power for incumbents, with both local and export demand showing robustness.
Financial Performance and Future Outlook
The EPC/infrastructure sector expects moderate growth, with revenue increasing by 1.5% YoY to Rs. 198.2 billion, while EBITDA and PAT show declines. In contrast, the capital goods sector projects stronger performance with 18% YoY revenue growth to Rs. 915.7 billion. The second half of FY25 is expected to see improved execution, supported by asset monetisation and robust balance sheets.
List of stocks with HDFC Securities expects to do well in Q4 FY25:
Capital goods stocks:
1. Larsen & Toubro (L&T)
L&T is a leading Indian multinational with expertise in sectors like construction, engineering, IT, power, defence, and financial services. Founded in 1938, it operates globally, working on major infrastructure and nuclear projects.
The stock is currently up by 1.79% for the day. Over the past month, it has decreased by 6.21%, and over the last year, it has not changed. However, the stock has seen a strong 173.8% return over the last five years.
2. Cummins India
A subsidiary of Cummins Inc., Cummins India manufactures diesel and natural gas engines. Established in 1962, it provides products for industries like mining, construction, and agriculture and serves diverse sectors with power systems and distribution.
The stock is currently up by 0.28% for the day. Over the past month, it has decreased by 17.24%, but it has risen by 45.9% over the last year. The stock has seen a remarkable 406% increase over the last five years.
3. Kalpataru Power Transmission (KPTL)
KPTL specialises in power transmission and distribution projects, expanding into infrastructure and real estate. The company operates in multiple countries, including Africa, the Middle East, and Asia.
The stock is currently down by 1.70% for the day. Over the past month, it has decreased by 11.68%, and over the last year, it has gone up by 60.62%. However, the stock has given more than a 121% increase over the last five years.
4. Steel Authority of India Limited (SAIL)
Established in 1973, SAIL is a leading government-owned steel manufacturer in India. With five integrated and three special steel plants, it produces a wide variety of steel products for various industries and infrastructure projects.
The stock is currently up by 0.94% for the day. Over the past month, it has decreased by 10.39%, and over the last year, it has fallen by 4.04%. However, the stock has risen by 113% over the last five years.
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Infrastructure Stocks:
1. HG Infra Engineering
HG Infra Engineering is known for its civil engineering expertise, particularly in highways and bridges. The company contributes significantly to India’s infrastructure sector with large-scale construction projects.
The stock is currently up by 0.46% for the day. Over the past month, it has decreased by 7..7%, but it has risen by 53.2% over the last year. The stock has experienced a strong 391% increase over the last five years.
2. PNC Infratech
PNC Infratech focuses on road and highway construction. With a strong presence in public-private partnerships, it handles major infrastructure projects across India, shaping the country’s urban and transport infrastructure.
The stock is currently up by 1.57% for the day. Over the past month, it has decreased by 5.56%, and over the last year, it has fallen by 25.17%. However, the stock has increased by 56.86% over the last five years.
3. NCC Limited
NCC Limited is a key player in India’s construction industry, engaged in civil engineering and infrastructure projects. It excels in building roads, irrigation systems, and urban infrastructure, delivering projects on time and with high quality.
The stock is currently up by 1.86% for the day. Over the past month, it has decreased by 19.37%, but it has risen by 30.73% over the last year. The stock has experienced a significant 322.8% increase over the last five years.
Written By Fazal Ul Vahab C H
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