Capex Momentum to Continue; L&T, IRB, NCC Set to Benefit, Says CLSA

According to global brokerage firm CLSA, the newly formed administration is expected to maintain a strong focus on infrastructure and defence sectors, paving the way for continued growth in these critical areas. This positive outlook is bolstered by the administration's coalition allies, who are anticipated to reinforce the emphasis on capital expenditure further.

Ambitious 100-Day Agenda on the Horizon

CLSA's channel checks suggest that an ambitious 100-day agenda is being prepared to propel the incoming government into action. Large orders across the infrastructure and defence sectors are expected, reflecting the administration's commitment to driving development and modernization.

Innovative Funding Solutions to Fuel Growth

The brokerage firm believes innovative funding mechanisms and the Reserve Bank of India's dividend bounty should ensure adequate financial resources to support social initiatives. This strategic approach could alleviate concerns over the coalition government's tilt towards more populist measures, which could potentially hinder economic progress.

State-Level Capex Revival

While the need for coalition allies to remain in power is often considered a cause for concern, CLSA takes a different stance. The brokerage believes that demands from coalition partners for increased capital expenditure will likely revive capex at the state level, further bolstering infrastructure development across the country.

Key Beneficiaries: Construction and Capital Goods Giants

CLSA has identified several companies poised to benefit from the anticipated capex push under the new administration. Among the key beneficiaries are:

• Larsen & Toubro (L&T)
• IRB Infra
• NCC
• J Kumar Infraprojects

These firms, operating in the construction and capital goods sectors, are well-positioned to capitalize on the expected surge in infrastructure and defence-related projects.

As of 9.18 am, shares of L&T, IRB Infra, NCC, and J Kumar Infraprojects were trading 0.2-4.2 percent higher on the National Stock Exchange, reflecting investors' optimism in the sector's growth prospects.