As India embarks on a historic capital expenditure (capex) journey, the investment landscape is shifting in favor of sectors that build, power, and equip the nation. From roads and railways to power grids and industrial automation, the government’s aggressive infrastructure push and rising private sector participation are unlocking massive opportunities.
But which companies are best positioned to ride this multi-year capex wave?
Let’s dive deep into the structural capex story, analyze the sectors leading the charge, and spotlight some stocks that may deliver long-term alpha from FY25 to FY28.
🚧 Capex Revival: What’s Driving the Boom?
India’s total capex outlay for FY25 stands at ₹11.11 lakh crore — a 16.9% jump over FY24’s revised estimate. The government’s push toward infrastructure-led growth is clear:
- ₹2.78 lakh crore allocated to Railways
- ₹1.78 lakh crore earmarked for Roads
- ₹1.22 lakh crore for Power and Renewable Energy
- PLI schemes and defence modernization getting strong traction
- States and PSUs ramping up spending again after pandemic slowdown
At the same time, the private sector is showing signs of revival with new greenfield projects, data centers, and industrial automation seeing inflows.
This dual engine of public + private capex is expected to sustain growth over the next 3–5 years — presenting long-term wealth creation opportunities for investors.
📈 Which Sectors Will Benefit the Most?
The primary beneficiaries of India’s capex upcycle include:
1.Infrastructure & Construction
- Roads, highways, metros, and logistics corridors
- Urban development and affordable housing
- Water and sanitation projects
2.Capital Goods & Engineering
- Industrial machinery, automation systems, HVAC
- EPC companies with government/PSU orders
- Railway and defence contractors
3.Power & Renewables
- Grid modernization and smart meters
- Solar and wind project EPC
- EV infrastructure and power transmission
🧠 Our Stock Selection Criteria
To ensure our picks are sustainable long-term compounders, we focus on:
- Robust order book and execution capability
- Low debt levels and efficient capital use
- Operating leverage to benefit from rising scale
- Strong promoter credibility and historical performance
💡 Top Stocks to Watch in India’s Capex Boom (2025–28)
Here are the stocks we believe are best poised to ride the capex wave over the next 3 years:
1.Larsen & Toubro (L&T)
Why it stands out:
India’s undisputed infra & EPC giant with an ₹4 lakh crore+ order book, presence across railways, metros, defence, power, and now green hydrogen.
Key triggers:
- Strong Middle East inflows
- Capex from defence, water, and smart cities
- Consistent RoE and dividend payouts
Risk to watch: Execution delays due to geopolitical issues.
2.ABB India
Why it stands out:
Leader in electrical equipment, automation, and robotics — a major beneficiary of India’s industrial automation and smart manufacturing wave.
Key triggers:
- Rising private capex in auto, FMCG, cement
- Asset-light business with near-zero debt
- Export growth potential from India as base
Risk to watch: Margin sensitivity due to global raw material costs.
3.KEC International
Why it stands out:
A major EPC player in transmission, railways, and civil construction, backed by the RPG Group. Order inflow at all-time highs.
Key triggers:
- Domestic and global T&D projects
- Urban infra (metros, smart cities) gaining momentum
- Decline in commodity prices aiding margins
Risk to watch: Working capital cycles and forex risks in exports.
4.Cochin Shipyard
Why it stands out:
A niche defence and commercial shipbuilder, now building India’s first green hydrogen-powered vessels.
Key triggers:
- Naval & Coast Guard orders
- Renewable fuel-based marine contracts
- Strong cash position and high margins
Risk to watch: Lumpy earnings due to project-based nature.
5.Thermax
Why it stands out: Clean energy and industrial utility player benefiting from shift to sustainable infrastructure.
Key triggers:
- Strong execution in waste heat recovery, green boilers
- Export demand from Southeast Asia and Africa
- Healthy balance sheet and ROCE
Risk to watch: Policy risks in clean energy and long project cycles.
Honorable Mentions
- Siemens India – Strong play on automation, grid, and metro rail
- GR Infraprojects – Roads, bridges, HAM projects
- Kalpataru Projects – T&D and infra
- Bharat Electronics (BEL) – Beneficiary of defence capex
- NTPC & Power Grid – PSU giants aligned with India’s net zero goals
🧭 Long-Term Investor Takeaways
- The capex theme is not cyclical, but structural, supported by strong political will, fiscal headroom, and private interest.
- Look for companies with execution capability, financial strength, and sectoral tailwinds.
- This theme may play out well for thematic mutual funds, long-term SIPs, and direct stock investors.
🏁 Final Thoughts
India’s capex boom is more than just a government budget line — it is a nation-building moment. For investors, it’s an opportunity to participate in India’s transformation story by betting on businesses that will literally build the future.
As FY25–28 unfolds, staying focused on this theme could unlock multi-year compounding potential — but only if you back the right horses.
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