Road and infrastructure companies reported a mixed performance in the first quarter of FY27, with revenue growth remaining under pressure despite a sharp improvement in profitability, according to Axis Securities. The brokerage said companies under its road infrastructure coverage recorded a 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.
On the margins front, EBITDA margin stood at 14.7% in Q1FY27, compared with Axis Securities’ estimate of 11.5% and 10.3% in Q4FY26. The brokerage noted that the margin expansion was partly driven by exceptional items, while adjusted margins remained below expectations. Meanwhile, non-road infrastructure companies largely delivered stronger growth, supported by healthy execution and robust order books.
Axis Securities has identified Kalpataru Projects International, RITES and GR Infraprojects as its top conviction infrastructure picks. 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.
Top conviction stocks
Kalpataru Projects International
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.
Axis Securities also highlighted record order inflows of over ₹2,800 crore in the Buildings & Factories segment during Q1FY27 and improving execution in the Oil & Gas business. A rising contribution from higher-margin segments, along with the company’s AA+ (Stable) credit rating, is expected to strengthen profitability and financial flexibility.
RITES
Axis Securities has maintained its ‘Buy’ rating on RITES with a target price of ₹250, citing strong order inflows and improving revenue visibility. The company secured 128 new orders worth ₹674 crore in Q1FY27, taking its order book to a record ₹9,450 crore. According to the brokerage, the balanced mix of turnkey projects and consultancy assignments provides a strong foundation for long-term growth.
Axis Securities expects export execution, including the ₹900 crore Bangladesh coach order, to accelerate from Q2FY27. It forecasts a 17% revenue CAGR over FY26–FY28E, supported by faster turnkey project execution and steady high-margin consultancy revenues.
GR Infraprojects
Axis Securities has maintained its ‘Buy’ recommendation on GR Infraprojects, with a target price of ₹1,020, citing a strong order book, a robust bidding pipeline, and a healthy balance sheet.
According to the brokerage, GR Infraprojects had an order book of ₹25,319 crore as of 30 June, spanning highways, roads, railways, transmission, telecom and tunnel projects, providing revenue visibility for the next 24–36 months. Management has guided for 15%–20% revenue growth in FY27, with revenue targeted at ₹11,000– ₹12,000 crore by FY28.
Axis Securities expects GR Infraprojects’ revenue, EBITDA and PAT to grow at CAGRs of 17%, 10% and 11%, respectively, over FY26–FY28E. The brokerage also highlighted the company’s ambitious ₹20,000– ₹22,000 crore order inflow target for FY27, supported by a sizeable tender pipeline and diversified capabilities. With borrowings of just ₹239 crore and a debt-to-equity ratio of 0.03x, Axis Securities believes GR Infraprojects remains well placed to pursue growth opportunities.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
