If you scan the standard infrastructure stocks that draw daily market chatter, you’ll find the same expected list of large Engineering, Procurement and Construction (EPC) names leading the discussion.
But a look deeper inside the mid-cap universe will show you a group of companies that are silently compounding order books, controlling execution, and protecting their balance sheets with patient discipline, yet trade at estimations that seem detached from their fundamentals.
These are not the popular capex-cycle celebrities; they’re the quiet compounders the market tends to notice only after the rerating has happened.
As India enters the sharpest capital expenditure cycle since 2010, with government infrastructure outlay rising to all-time highs and private capex finally showing early signs of renewal, the companies that are likely to benefit most are often not the biggest names, but the most operationally organised.
That’s what makes the following three stocks particularly interesting: each shows steady earnings visibility, strong performance, and valuations that continue to stay below their peer-set medians on valuation ratios.
Here is a closer look at the trio that is noiselessly building India’s next decade of highways, tunnels, bridges, and public assets; all while remaining underrated.
#1 KNR Constructions: The ‘Lean Balance Sheet’ Champion
KNR Constructions, a company that seldom features in news-driven investor discussions yet regularly delivers numbers that make large-cap EPC competitors look pale by comparison.
One of India’s most reliable mid-cap Engineering Procurement Construction contractors, recognized for its systematic execution in national highway, irrigation, and state-level road projects.
The company has consistently maintained sector-leading operating margins in the 20-30% range, even during raw material instability and price increases.
Its sales revenue for the second quarter of FY26 was ₹646 crores. However, the revenue slipped ~67% YoY compared to the same quarter in FY25. You can see a similar trend in the net profit of ₹105 crores, excluding exceptional items, marking a drop of ~77% YoY.
The management attributed the drop in revenues to a sharp fall in the project execution and no income boost from asset sales like the previous year, creating a high base effect.
In spite of the poor second quarter, the compounded profit growth over the last three years has been 45% while the return on equity (ROE) has been 23% during the same period.
KNR Constructions: 3-Year Share Price Trend
KNR trades at a low P/E of ~5.9×, far below the typical infra-EPC median of 18.6x. Its Enterprise Value/Earnings before interest, tax, depreciation and amortisation (EV/EBITDA) of ~6× also lies at a significant discount to peers in the construction sector, with its median of ~11x.
Should You Pay Attention
With KNR’s long-term order book of ~₹ 8,216 crores as of 30th Sept 2025, high-performance quality, and cautious bidding policy places it in a rare category among EPC players that blend constancy with scalability. It has built a reputation for on-time project deliveries while maintaining a remarkably lean balance sheet.
Why It Is Missed
KNR hardly ever pursues headline-grabbing mega projects; it aims for steady, mid-sized wins. Because its story isn’t “rapid growth,” the market often misjudges the compounding effect of consistent execution.
Why It Could Be a Surprise
If the next round of NHAI and state-level ordering speeds up, KNR’s robust order book and strong margins could lead to a rerating that catches investors off guard, particularly since it’s already trading well below its real value.
#2 PNC Infratech: A Mammoth ₹20,000 Cr Order Book
PNC Infratech lies at a different but similarly fascinating crossroads. Unlike KNR’s silent planned growth, PNC has determinedly developed its geographic reach, expanded into multiple EPC verticals, and upheld a very strong order-book pipeline.
Strong in building roads, bridges, water projects, and airport-related civil work, it has formed long-term relationships with NHAI and state agencies, bringing in stable orders and visibility.
Its implementation strength is higher, and while that brings added working-capital stress, the company has managed the trade-offs relatively well. The company has consistently maintained operating margins in the 20-25% range.
Its revenue for the Q2FY26 was ₹1,128 crores. The revenue fell ~21% YoY compared to the same quarter in FY25. However, the net profit grew 15% YoY to ₹96 crores, excluding exceptional items.
Several factors led to the fall in revenue. One of the chief reasons was delays in crucial HAM projects, and a slowdown in new project awarding by NHAI. Moreover, the one-year disqualification from the Ministry of Road Transport & Highways (MoRTH) tenders in late 2024 affected the order growth, along with usual execution issues due to rising prices and changes in weather.
The compounded profit growth over the last three years has been 12% while the ROE has been 16% during the same period.
PNC Infratech: 3-Year Share Price Trend
PNC’s current EV/EBITDA of ~7.19× places it below peers in the mid-cap EPC space, while its P/E at 15.7x is still comfortably lower than the broader infra industry median of 18.7x.
This valuation discount exists even though the company has delivered solid double-digit order-book growth to reach ₹20,100 crores as of 30th Sept 2025.
Should You Pay Attention
PNC is entering a period where its order book has been remade after a pause, and implementation has resumed. The blend of a leaner balance sheet, increasing margins, and a fresh HAM (Hybrid Annuity Model) monetisation strategy boosts its next growth phase outlook.
Why Is It Missed
Past holdups and working-capital pressure reduced investor sentiment, and the stock didn’t bounce back instantly. Because infra stocks often take time to recover market confidence, PNC still trades at a lower value than its fundamentals.
Why It Could Be a Surprise
The company’s long-term view remains strong due to the government’s continuous push for overhauled EPC tendering frameworks, national highway development, and an increasing share of hybrid-annuity-mode (HAM) projects entering the execution stage.
#3 HG Infra: The High-Margin Specialist
HG Infra Engineering, a company that has substantially improved its standing as a dependable EPC player over the last few years.
It is a fast-growing EPC supplier focusing on highway expansion, engineering works, and state-led infrastructure projects. Over the last few years, it has emerged as one of the most operationally effective mid-cap infrastructure companies.
The company has consistently maintained operating margins in the 20-25% range.
Its revenue for the Q2FY26 was ₹904 crores. The revenue grew just ~0.23% YoY compared to the same quarter in FY25. However, the net profit fell 35% YoY to ₹52 crores, excluding exceptional items.
As per the management, rising contract expenditure, high-interest finance, surging depreciation, high operating costs, and thinner margins despite steady revenue led to a fall in net profits for five consecutive quarters.
The compounded profit growth over the last three years was 9% while the Return on equity was 23% during the same period.
HG Infra: 3-Year Share Price Trend
HG Infra trades at an EV/EBITDA of ~10×, lower than larger listed EPC peers’ median of 11x. The company’s P/E at ~12x rests below the sector median of 18.69x, despite advancing fundamentals.
Should You Pay Attention
HG Infra has a robust order book of ₹13,933 crores as of 30th Sept 2025, which includes national highways, state road networks, and urban projects. It has maintained high implementation standards without taking on unnecessary debt. Doing so has allowed the company to scale sustainably.
Its balance sheet is significantly cleaner than many peers in the same revenue bracket. The company avoids risky bidding, maintains strong cost control, and manages its EPC book with a level of certainty that is rare in the mid-cap sector.
Why It Is Missed
HG Infra Engineering does not have the brand perception of larger EPC players and doesn’t take part in massive or debated projects that generally draw investor buzz. As a result, the market tends to combine it with low-quality mid-cap names.
Why It Could Be a Surprise
If the sector margin recovery plays out as directed and implementation speeds up across new FY26 projects, HG Infra may probably see faster growth than peers. And its sub-sector valuation discount could reduce sharply, stunning investors who still believe it is a “small EPC player.”
Disadvantages to Remember
Policy and tender cycles may slow again. And for infrastructure businesses that live and die by the government capex prospects, it may prove damaging.
If NHAI tendering slows down as it did during the past elections, or if the new budget moves spending to social schemes, the order inflows may dip sharply. Even a brief slowdown can decrease revenue certainty for EPC players that rely on high project churn.
Working capital stress is a given, considering infra businesses carry receivable cycles much longer than most industries. Compensation from state agencies can extend beyond 120–150 days, compelling companies to depend on steep short-term borrowing.
Any delay in milestone certification or land acquisitions affects operating cash flow, even for those with strong order books.
Any issues with project execution can wipe out margins. A price rise in cement, steel, and labour can turn profitable projects into losses. Delays in environmental clearances or monsoons can make budgets bleed. Small and mid-sized suppliers are exposed as they carry less buffer capital.
The Hybrid Annuity Model may reduce traffic risk, but it still expects companies to invest upfront equity. If interest rates stay high or refinancing becomes expensive, returns decrease.
PPP assets also face operational threats: toll leakage, demand changeability, and regulatory changes in toll policies.
Some mid-sized infra players get over 60–70% of their order book from specific states or a single government authority. Any change in government leadership, funding volume or audit scrutiny in those pockets can upset project pipelines.
Even if the fundamentals improve, the market may not rerate these stocks as quickly as others, because the sector comes with a legacy discount.
Investors consider delays, risk, and cyclicality in their stock bets. This communication bias can delay undervaluation despite numbers moving in the right direction.
In a market where the biggest names attract the loudest conversations, the real prospects often lie with companies that quietly execute without seeking the spotlight. KNR Constructions, PNC Infratech, and HG Infra Engineering sit in that space, businesses with stable fundamentals, reasonable valuations, improving visibility, and surprisingly low investor attention.
As India’s multi-year infrastructure cycle gathers speed, these silent performers may turn into some of the sector’s most powerful long-term rerating stories, specifically because the market hasn’t fully priced them in yet.
Disclaimer:
Note: We have relied on data from www.Screener.in throughout this article. Only in cases where the data was not available have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points, and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Archana Chettiar is a writer with over a decade of experience in storytelling and, in particular, investor education. In a previous assignment, at Equentis Wealth Advisory, she led innovation and communication initiatives. Here she focused her writing on stocks and other investment avenues that could empower her readers to make potentially better investment decisions.
Disclosure: The writer and her dependents do not hold the stocks discussed in this article.
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