Best Road & Highway Sector Stocks to Invest in Feb, 2026

What are Road & Highway Sector Stocks?

Road & Highway Sector Stocks represent shares of companies engaged in the development, construction, and maintenance of national and state highways, expressways, and related infrastructure. With the Indian government targeting a ₹111 lakh crore investment under the National Infrastructure Pipeline (NIP) by 2030, road infrastructure is a major focus area. According to MoRTH, India built over 12,300 km of highways in FY24 and aims to expand at a CAGR of 8% to meet logistics and connectivity goals.

Road & Highway Sector Stocks are also gaining from rising government allocations and public-private partnerships (PPPs). The Bharatmala Pariyojana, worth over ₹10 lakh crore, is driving large-scale highway construction across economic corridors.

Companies like IRB Infrastructure, KNR Constructions, and PNC Infratech are securing EPC and HAM contracts to capture this surge. With increasing freight demand and rural-urban integration, road sector stocks provide exposure to India’s core infrastructure growth and policy-driven capital expenditure.

Why You Should Invest in Road & Highway Sector Stocks?

You should invest in Road & Highway Sector Stocks for 3 main reasons. The reasons are Government-Led Infrastructure Push, Strong Order Books and Asset Monetisation Models. 

• Government-Led Infrastructure Push: India’s National Infrastructure Pipeline (NIP) aims to invest over ₹111 lakh crore by 2030, with roads getting a 19% allocation. Flagship programs like Bharatmala Pariyojana are expanding highways across strategic and economic corridors. In FY24, over 10,000 km of highway projects were awarded, benefiting companies like IRB Infrastructure, KNR Constructions, and Dilip Buildcon.
• Strong Order Books: Road EPC and HAM players are witnessing robust order inflows. As of FY24, IRB Infrastructure had an order book exceeding ₹20,000 crore, while HG Infra secured ₹1,900 crore in new contracts. Increased execution efficiency and predictable annuity revenues make these companies attractive for long-term growth. The government’s timely payments under HAM (Hybrid Annuity Model) also lower working capital stress.
• Asset Monetisation Models: Through initiatives like the National Monetisation Pipeline (NMP), developers can recycle capital by monetising operational road assets via InvITs and TOT (Toll-Operate-Transfer) models. IRB’s InvIT and G R Infraprojects’ TOT participations are examples of how companies are unlocking value and funding new projects without increasing leverage.

With policy support, high project visibility, and monetization flexibility, stocks like IRB Infra, HG Infra, and KNR Constructions offer sustainable growth. Their strong execution track record and alignment with India’s infrastructure roadmap make them compelling plays on the country’s development story.

What is the Future of Road & Highway Sector Stocks?

Road & Highway sector stocks are gaining investor attention as infrastructure expansion and public-private partnerships drive capital flows into transportation assets. According to the Ministry of Road Transport and Highways, India plans to construct 50,000 km of highways under Bharatmala Phase-II, with a ₹10 lakh crore outlay by 2030. With increased budgetary allocations and asset monetisation through InvITs, listed players like IRB Infra and KNR Constructions are positioned for long-term growth.

Road & Highway sector stocks face risks like land acquisition delays and regulatory bottlenecks. As per NHAI, only 60% of highway projects met deadlines in FY24 due to environmental and legal clearances. While government support and hybrid annuity models reduce risk, execution delays, cost inflation, and policy shifts can impact margins and investor confidence in this capital-intensive space.

What Factors Affect Road & Highway Sector Stock Prices?

Road & Highway Sector Stock Prices are affected by 4 main factors. The factors are Government Infra Push, HAM/EPC Order Flow. Toll Revenues and Execution Efficiency.

• Government Infra Push: The Bharatmala and Gati Shakti initiatives are boosting road construction activity. The Ministry of Road Transport & Highways has allocated ₹2.78 lakh crore in the Union Budget FY25 for highway development. Stocks like IRB Infra and KNR Construction benefit directly from these public capex flows.
• HAM/EPC Order Flow: Hybrid Annuity Model (HAM) and EPC (Engineering, Procurement, Construction) contracts form the backbone of project awards. In FY24, NHAI awarded 6,000+ km of road projects under HAM/EPC. Firms with strong order books like PNC Infratech saw order inflow surge 22% YoY, driving revenue visibility.
• Toll Revenues: Toll collections are a stable income source for BOT-based players. IRB Infrastructure’s toll revenue grew 20% YoY in FY24 due to rising traffic and inflation-linked hikes, enhancing cash flows and valuations.
• Execution Efficiency: Timely project execution boosts margins and lowers working capital needs. HG Infra, with a 95% on-time execution rate, reported strong EBITDA margins and quicker asset monetisation in FY24.

With India targeting 50,000 km of new highways by 2030, road sector stocks like IRB Infra, KNR Construction, and PNC Infratech stand to benefit from steady order inflows, improved toll receipts, and policy-led capital support. Execution-focused firms with diversified order books offer resilient long-term value amid the infrastructure growth story.

What are the Advantages of Investing in Road & Highway Sector Stocks?

Investing in Road & Highway Sector Stocks is advantageous for 3 main reasons. The reasons are Infrastrucutre Push, Asset Monetisation Pipeline and Long-Term Government Contracts.

• Infrastructure Push: India’s National Infrastructure Pipeline (NIP) allocates over ₹20 lakh crore to roads till 2030. In FY24, over 12,300 km of highways were constructed, up 15% YoY. Companies like IRB Infrastructure, KNR Construction, and PNC Infratech benefit from the steady project pipeline under Bharatmala and PM Gati Shakti.
• Asset Monetisation Pipeline: NHAI’s asset monetisation target of ₹1.6 lakh crore by FY25 boosts private participation through InvITs and TOT models. IRB and Adani Roads are acquiring toll assets, ensuring recurring cash flows and efficient capital recycling. This lowers debt risk while improving margins.
• Long-Term Government Contracts: Road EPC and HAM projects come with multi-year visibility and annuity-based revenues. KNR Construction had an order book of over ₹11,000 crore in FY24, with 70% from highway projects. Fixed tenure and inflation-linked payments make these models resilient to cyclical downturns.

With India aiming to construct 100 km of roads per day and ramping up monetisation via InvITs and TOT, firms like IRB, PNC, and HG Infra stand to benefit from policy tailwinds, order visibility, and stable cash flows in India’s core infrastructure growth story.

What are the Risks of Investing in Road & Highway Sector Stocks?

Investing in Road & Highway Sector Stocks is risky for 3 main reasons. The reasons are Land Acquisition Hurdles, Regulatory Delays and Execution Risks. 

• Land Acquisition Hurdles: Infrastructure firms often face delays due to land acquisition bottlenecks. In FY23, the NHAI reported that over 25% of delayed highway projects stemmed from acquisition issues, affecting companies like IRB Infrastructure and KNR Constructions.
• Regulatory Delays: Approvals from multiple authorities can stall projects. For example, Dilip Buildcon faced delays in executing the hybrid annuity model (HAM) projects due to pending forest and environment clearances in Maharashtra and Madhya Pradesh.
• Execution Risks: Rising input costs and monsoon disruptions affect timelines and margins. In FY24, GR Infraprojects saw a 9% drop in EBITDA margins in Q2 due to elevated bitumen and cement prices, despite a strong order book.

With volatile raw material costs and complex clearances, road sector players must excel in project management and maintain financial discipline. Companies like PNC Infratech and HG Infra, known for execution track records and low debt levels, are better positioned to manage these sector-specific risks.

When Road & Highway Sector Stock Prices Go Up?

Road & Highway Sector Stock Prices Go Up mainly due to 4 reasons. The reasons are Traffic Volume Growth, Policy Reforms, Asset Monetisation and Capex Momentum.

• Traffic Volume Growth: India’s road traffic surged in FY24, with daily toll collections reaching ₹178 crore, a 20% increase from FY23, driven by FASTag adoption and economic activity. This growth enhances revenue visibility for toll operators. 
• Policy Reforms: Government initiatives like Bharatmala Pariyojana and amendments to the BOT model have streamlined project execution and attracted private investment, boosting sector confidence. 
• Asset Monetisation: The National Highways Authority of India (NHAI) plans to monetise road assets worth ₹60,000 crore through TOT and InvIT models by FY25, providing upfront capital for new projects and improving financial metrics for developers. 
• Capex Momentum: In FY24, road construction reached a record 12,349 km, supported by a 13% CAGR in sector capex from FY20 to FY24. Companies like Larsen & Toubro and IRB Infrastructure are capitalising on this growth. 

With robust traffic growth, supportive policies, and significant capital investment, road and highway infrastructure stocks like Larsen & Toubro, IRB Infrastructure, and KNR Constructions are well-positioned for long-term growth. The sector’s expansion, underpinned by government initiatives and private participation, offers compelling opportunities for investors seeking exposure to India’s infrastructure development.

When Road & Highway Sector Stock Prices Go Down?

Road & Highway Sector Stock Prices Go Down mainly due to 3 reasons. The reasons are Project Delays, Rising Input Costs and Regulatory Uncertainty.

• Project Delays: Infrastructure projects often face delays due to land acquisition issues, environmental clearances, and litigation. IRB Infrastructure saw execution slowdowns in 2023 on key expressway projects, impacting revenue timelines and investor confidence.
• Rising Input Costs: Costs of key raw materials like bitumen, steel, and cement can fluctuate. In FY24, higher cement prices dented margins for players like KNR Construction and Ashoka Buildcon, leading to stock underperformance despite a strong order book.
• Regulatory Uncertainty: Policy changes in toll regulations or financing norms can impact future earnings. Delays in HAM (Hybrid Annuity Model) payments from government bodies have affected working capital cycles for EPC firms, resulting in lower valuations.

Despite strong long-term demand, road sector stocks like Dilip Buildcon and Sadbhav Engineering remain vulnerable to execution delays, material inflation, and regulatory hurdles. Investors should track order execution speed, payment cycles, and debt levels to avoid downside risks in this capital-intensive segment.

What Government Schemes Are Supporting Road & Highway Sector Growth?

The road & highway sector is being actively driven by flagship government schemes like Bharatmala Pariyojana, PM Gati Shakti, and the National Infrastructure Pipeline (NIP). As per MoRTH, Bharatmala aims to develop 65,000 km of national highways, while Gati Shakti integrates multimodal logistics.

The NIP has allocated ₹20+ lakh crore for road development by 2030. These programs ensure long-term policy continuity and attract EPC and HAM investments.

How Does the Hybrid Annuity Model (HAM) Work in the Road Sector?

HAM is a financing model where the government pays 40% of the project cost upfront, and the remaining 60% is paid as annuities over 15–20 years. This reduces revenue risk for contractors and offers predictable cash flows. In FY24, over 50% of road contracts were awarded under HAM, helping developers maintain low debt levels and stable earnings even in volatile markets.