Infra Stocks Surge as Market Anticipates Major Capex Boost in Union Budget 2024

Infrastructure and construction stocks saw a significant surge on the eve of the Union Budget 2024, as investors speculated on major capital expenditure announcements. Analysts predict that the government will uphold its Rs 11.1 lakh crore capex estimate from the Interim Budget, with a continued emphasis on key sectors such as roads, power, urban development, and railways.

Axis Securities has highlighted the long-term economic benefits of sustained infrastructure investment, especially in roads, power, urban development, and railways. The brokerage expects a substantial increase in infrastructure spending to support the National Infrastructure Pipeline and Gati Shakti Master Plan.

On July 22, shares of major construction and infrastructure companies such as Ashoka Buildcon, KNR Constructions, NBCC, Man Infraconstruction, J Kumar Infraprojects, and PSP Projects experienced gains of up to 8 percent.

Investors are particularly optimistic about sectors like roads, railways, airports, and urban infrastructure, expecting increased funding for large-scale projects such as Bharatmala and Sagarmala. An anticipated 10-15 percent increase in the Ministry of Road Transport & Highways allocation further fuels this optimism.

Key projects like the Jal Jeevan Mission, High-Speed Rail, Smart Cities, and Inland Waterways Development are also expected to receive additional funds. Tata Projects has advocated for increased private capital expenditure to drive sector growth, aligning with Finance Minister Nirmala Sitharaman's Interim Budget, which already saw an 11.1 percent rise in infrastructure capex.

Axis Securities emphasized the significant opportunities for companies in highways, railways, and urban infrastructure development. Stocks such as KNR Constructions, PNC Infratech, RITES, KEC International, J Kumar Infraprojects, and Ahluwalia Contracts are expected to be in focus due to the ongoing thrust on infrastructure development.

Additionally, the surge in infrastructure projects is likely to drive demand for cement, benefiting companies like UltraTech Cement and Ambuja Cements. The budget may also place a strong emphasis on digital infrastructure, potentially offering incentives for data centers and smart cities, which could benefit firms such as Anant Raj. Enhanced focus on affordable housing could positively impact urban developers like MICL and TARC.

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