The December 2025 quarter was quite difficult for companies in the capital expenditure (capex) / EPC segment with delays in project implementation and allied land acquisition problems.
The recent Union budget had given a fresh lease of life to capex in FY27 with a hike in allocation of nearly 9% to Rs 12.2 lakh crore. As part of the above allocation, the central government is expected to accelerate its spending on projects related to roads / highways, bridges, tunnels, electrification, water management and allied projects.
Investors are also looking beyond the well- established players like Larsen & Toubro and ABB India, towards smaller construction and infrastructure players , which offer growth prospects along with reasonable growth prospects.
Let’s start by taking a look at the valuations of some of these companies.
Relative valuations: Why the ‘big boys’ look expensive
| Consolidated P/E | EV / EBITDA | |
| ABB India | 75.6 | 50.3 |
| Larsen & Toubro | 36.3 | 17.5 |
| Dilip Buildcon | 11.0 | 6.7 |
| Patel Engineering | 7.0 | 4.3 |
| Ramky Infrastructure | 14.6 | 7.6 |
| G R Infraprojects | 8.6 | 6.8 |
Clearly, from the above table, it is evident that smaller construction stocks trade at valuations much lower than that of ‘big boys’ based on both valuation matrix – P/E and EV/EBIDTA. And with this sector expected to grow over the next few quarters with more budgetary allocation, smaller construction stocks are grabbing attention from investors.
As one investor put, the ‘large’ players, L&T and ABB India have perfectly priced the growth over the next few quarters.
Smaller construction stocks on Dalal Street – A mixed bag
There is no clear trend on Dalal Steet for smaller players in the capex / EPC segment. It could be partly attributed to investors waiting for more clarity on implementation in capex projects during FY27.
For instance, Dilip Buildcon lost 1.2% in early Monday trade to Rs 442.8, and it had reached its 52-week high of Rs 587.9 on 24 September, 2025.
In contrast, Patel Engineering lost 1% to 27 in early Monday trade, and it is trading close to its 52-week low of Rs 26.2 that was reached on 12 January, 2026.
Ramky Infrastructure also lost 0.6% to Rs 472 in early Monday trade, and it is hovering above its 52-week low of Rs 374.4 that was reached on 7 April, 2025.
G R Infraprojects declined 2.7% to Rs 947.3 in early Monday trade, and hovering above its 52-week low of Rs 883.4 that was reached on 27 January, 2026.
Q3FY26 report card – sluggish project implementation and rising input costs
A key characteristic of the December 2025 quarter for the capex / construction stocks was sluggish implementations of infrastructure projects for a variety of reasons including funds allocated by government bodies and admin-related problems like land acquisition.
Investors are closely monitoring how quickly the above trend will be reversed going forward with the enhanced budgetary allocations for this sector.
Performance in the December 2025 quarter
| Net Sales (%) | Net Profit (%) | Order book (Rs crore) | |
| ABB India | 5.7% | -18% | Rs 10,471 crore |
| Larsen & Toubro | 10.5% | -3.5% | Rs 733,161 crore |
| Dilip Buildcon | -17.5% | 400% | Rs 29,372 crore |
| Patel Engineering | 2.8% | -12% | Rs 15,123 crore |
| Ramky Infrastructure | 6.3% | 30% | Rs 9,000 crore |
Patel Engineering – Rising cement and steel prices hurt operating margins
Patel Engineering has more than seven decades of experience in diverse infrastructure projects – it is involved in the construction of dams, bridges, tunnels, roads, piling works, industrial structures and other kinds of heavy civil engineering works on a pan India basis.
Its consolidated revenue from operations grew 2.8% y-o-y to Rs 1,239.3 crore in the December 2025 quarter, with its operating profit declining 850 margin basis points y-o-y to 11.9% in quarter under review.
The company has highlighted progress in several of its ongoing infrastructure projects including pouring of over 10 lakh cubic meters of concrete in the dam of the Kiru HEP, Kashmir in the quarter under review.
However, the company faced a jump in cost of material including cement and steel in Q3FY26, and it impacted operating margins. Its operating profit margins fell 350 basis points y-o-y to 11.9% in the December 2025 quarter.
Ms Kavita Shirvaikar, MD, Patel Engineering, in a press release, said “The Q3 FY26 results reflect improving financial performance and our disciplined approach towards achieving top-line growth, while maintaining sustainable profitability.”
Higher costs resulted in a near 12% y-o-y fall in its consolidated net profit of Rs 71.5 crore in December 2025 quarter.
The company had raised nearly Rs 399 crore via a recent rights issue, and it has highlighted in the investor presentation that Rs 254 crore will be utilised for debt repayment during FY26 and FY27, and the remainder for general corporate purposes.
Its consolidated borrowings were Rs 1,560 crore as on 30 September, 2025, according to Screener.in.
Dilip Buildcon – exceptional gains drive 400% surge in net profit
Bhopal-based Dilip Buildcon has a presence in diverse projects in bridges, roads and highways, irrigation, tunnels and water supply, amongst others.
In its investor presentation, the company highlighted its consolidated revenue from operations fell nearly 17.5% to Rs 2,138 crore in the December 2025 quarter, and that was attributed to highway construction projects facing delays along with projects in hand facing land acquisition projects.
Its operating profit margin also fell 50 basis points y-o-y to 17.9% in Q3FY26 on account of higher input costs.
However, the company’s net profit surged nearly 400% y-o-y to Rs 789 crore in the quarter under review as it showed an exceptional gain of Rs 585 crore. The company had transferred its equity stake and non-convertible debentures in seven hybrid annuity model road projects to Anantam Highways Infrastructure Investment Trust (InvIT).
Ramky Infrastructure – project execution drives growth
Hyderabad-based Ramky Infrastructure has a presence in water and waste water, roads and urban solutions and industrial solutions, amongst other sectors.
Its consolidated revenue from operations grew 6.3% y-o-y to Rs 488.9 crore in the December 2025 quarter, and the senior management pointed to progress in projects related to water and wastewater, and urban solutions.
The company is involved in executing the Rs 2,085 crore Godavari Drinking Water Supply Scheme (Phase II & III) to fill Osmansagar and Himayathsagar reservoirs, and rejuvenate the Musi River.
Its operating profit margin basis points fell nearly 1,000 basis points y-o-y to 15.5% in Q3FY26, and that was owing to higher costs of cement and steel. Higher other income helped its consolidated net profit rise 30% to Rs 78 crore in the quarter under review.
Order book – growth engine of the future
Order books serve as a signal for future growth opportunities for infrastructure and construction companies. On the flip side, of crucial importance will be the ability of companies in this sector to manage rising cost of inputs, like steel and cement.
Dilip Buildcon has an order book of Rs 29,372 crore at the end of the December 2025 quarter, as against Rs 14,923 crore at the end of FY25.
For Ramky Infrastructure, it’s order book of Rs 9,000 crore at the end of the December 2025 quarter, as against Rs 7,800 crore at the end of FY25.
And Patel Engineering’s order book was broadly flat – Rs 15,123 crore from 52 infrastructure-related projects across the country at the end of December 2025 quarter, as against Rs 15,217 crore at the end of FY25.
Investors on Dalal Street
Capex and infrastructure-related stocks have got a new lease of life with the recent budget proposals to hike spending for this sector.
Investors will be closely monitoring the progress and implementation of the various government-funded capex projects over the next few quarters. In addition, the ability of players in this sector to manage rising input costs will also be key.
Smaller players in the capex segment appear very reasonably valued compared to the ‘big boys’ in this sector, and investors can add them to their watchlist for 2026.
Amriteshwar Mathur is a financial journalist with over 20 years of experience.
The writer and his family have no shareholding in any of the stocks mentioned in the article.
Disclaimer: The website managers, its employee(s), and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein. The content of the articles and the interpretation of data are solely the personal views of the contributors/ writers/authors. Investors must make their own investment decisions based on their specific objectives, resources and only after consulting such independent advisors as may be necessary.