As Budget 2026 approaches, market commentary from brokers and policy analysts indicates strong expectations for sustained government commitment to highway and logistics capital expenditure. The focus has evolved from merely announcing new corridors to ensuring faster execution of existing projects including Bharatmala, multimodal logistics parks, and last-mile connectivity to economic clusters.

Budget Expectations and Policy Framework

Analyst commentary leading up to the budget suggests several key policy directions:

• Sustained or mildly higher allocation to the Ministry of Road Transport and Highways, emphasizing economic corridors, border roads, and expressways
• Greater utilization of hybrid annuity model (HAM) and TOT/InvIT structures for capital recycling
• Focus on resolving contractor payment delays and improving dispute resolution mechanisms

Order inflows for key EPC players have remained healthy through FY25-26, supported by continuous tendering from NHAI and state agencies. Market participants are particularly watching for budget signals addressing cash flow predictability, which remains critical for sector re-rating.

Sector Performance Analysis

Based on six-month relative strength comparison, the infrastructure sector shows clear performance differentiation among key players:

The analysis reveals a clear shift in momentum favoring Larsen & Toubro and Dilip Buildcon, which appear to be benefiting from infrastructure spending momentum. Conversely, some players face execution delays or cost pressures, with certain stocks hitting multi-month lows.

Larsen & Toubro: Infrastructure Leadership

Current Market Price: ₹3,869.80

Larsen & Toubro demonstrated strong momentum throughout 2025 across infrastructure, technology, and energy sectors. The company secured major contracts in transportation, hydrocarbon, and building projects while expanding into sovereign cloud and sustainable construction solutions.

The company's technical analysis suggests potential upward movement, with the stock pushing above ₹3,900 attracting market attention. Chart patterns indicate possible movement toward ₹4,600 within six months, contingent on maintaining support above ₹3,700.

Dilip Buildcon: Project Pipeline Strengthening

Current Market Price: ₹472.30

Dilip Buildcon has significantly strengthened its project pipeline with notable contract wins:

Despite facing quarterly revenue pressures during late 2025 and early 2026, the company has maintained steady growth throughout 2025. Technical analysis suggests potential movement toward ₹650.00 within six months, with stop-loss positioned at ₹380.00.

Market Outlook

The infrastructure sector shows recovery potential through 2026, with government policy continuity expected to support sustained capital allocation. Key factors supporting sector optimism include healthy order books, rising share of central and state road projects, and alignment with broader economic development objectives. However, market participants should monitor execution capabilities and cash flow management as critical success factors for individual companies.

The infrastructure sector in India is showing signs of resilience and potential for sustained growth, despite a temporary slowdown in order momentum following recent elections. Industry experts and market analysts are optimistic about the sector's prospects, citing several key factors that could drive growth in the coming quarters.

Sector Outlook

Mayuresh Joshi from Marketsmith India anticipates a strong rebound across various infrastructure segments, including:

• Urban and rural affordable housing
• Ports
• Roads
• Railways
• Metro projects

This positive outlook is primarily attributed to the expected materialization of budgeted expenditure for high-intensity capital expenditure projects.

Key Players and Opportunities

Larsen & Toubro (L&T)

Larsen & Toubro (L&T) stands out as the most comprehensive infrastructure play in the market. The company's diverse portfolio covers:

• Infrastructure
• Hydrocarbons
• New energy
• Defence sectors

L&T's strong execution capabilities are expected to support working capital efficiency and Return on Equity (ROE) expansion. Recent developments further underscore L&T's market position:

• L&T's Heavy Engineering vertical has secured multiple orders in both domestic and international markets.
• The company has won contracts for manufacturing vessels for NGL fractionator and Blue Ammonia projects in the United States.
• Orders for ammonia and urea processing equipment have been secured from Mexico for two fertilizer plants.
• L&T has also received orders for critical heat exchangers from Brazil and a refinery equipment order from Saudi Arabia.

These recent wins demonstrate L&T's global reach and technical expertise in delivering high-performance solutions across various industries.

Power Sector

Two companies in the power sector are well-positioned to benefit from the ongoing renewable energy transition:

1. NTPC
2. Tata Power

Railway Sector

The railway infrastructure segment is expected to see steady growth, with two companies poised to gain from consistent order inflows and tender activity:

1. Texmaco Rail
2. Titagarh Wagons

Affordable Housing

The affordable housing initiative is likely to benefit several players:

• Select housing finance companies serving rural and semi-urban markets
• NCC
• Pennar Industries

Challenges in Related Sectors

While the infrastructure sector shows promise, it's worth noting that the chemical sector faces some headwinds:

• Recovery in the chemical sector is expected to take several quarters.
• Weak Chinese demand and supply dynamics are affecting global pricing.
• SRF's fluorochemicals business shows promise.
• The packaging films segment faces challenges due to Chinese competition.

Conclusion

Despite the current slowdown in order inflows post-elections, the infrastructure sector in India appears to be on track for multi-year growth. With government expenditure expected to materialize and diverse opportunities across various sub-sectors, companies with strong execution capabilities and diversified portfolios are likely to benefit in the coming quarters. Investors and industry watchers should keep a close eye on budget allocations, project implementations, and sector-specific developments to gauge the pace and sustainability of this anticipated growth.