India's Infra Surge: Metro Networks EXPLODE & Tunnels Go Underground – Find Out Which Stocks Are Set to Soar!

India is witnessing an unprecedented expansion of its metro network, with operational routes growing from 248 km in five cities to over 1,000 km across 23 cities in just over a decade. This rapid growth has significantly boosted daily ridership, which has climbed from 28 lakh to more than 1.1 crore commuters.

Government Push for Integrated Mobility

The government is now mandating cities to prepare detailed mobility plans, establish unified transport authorities, ensure economic viability, and involve private sector participation before seeking central support. This structured approach provides long-term visibility for metro development projects.

The Rise of Underground Construction

As cities become denser and surface space diminishes, tunnel construction is becoming increasingly critical for new metro routes. Underground corridors are preferred for smoother, uninterrupted travel, reducing land acquisition challenges and often allowing for faster construction. This shift is creating sustained demand for companies skilled in complex underground engineering.

An Attractive Sector for Investors

The combined surge in metro expansion and tunnel construction makes the broader transit ecosystem an interesting investment space. Strong public spending, high project visibility, and stable ridership growth, coupled with multi-year project timelines, offer a significant runway for capable engineering and construction firms.

Leading Engineering and Construction Firms

A select group of engineering and construction companies stand out due to their scale, specialized skills, and consistent involvement in major metro and underground projects. These firms possess extensive experience with complex civil structures and a visible pipeline of urban transit projects, positioning them to capitalize on India's focus on efficient, clean mobility.

Key Companies in Focus

• Larsen & Toubro: This multinational conglomerate, a leader in engineering, procurement, and construction (EPC) solutions, saw strong momentum in its heavy civil and transport infrastructure segments in Q2 FY26. Its order prospects in infrastructure stand at Rs 6.5 trillion, with a significant portion from transport and heavy civil works.
• Ircon International: A Public Sector Undertaking (PSU) specializing in large, complex infrastructure projects, particularly railways. The company reported Rs 2,112 crore in Q2 revenue, supported by domestic execution, with an order book of Rs 23,865 crore, 91% of which is domestic.
• Afcons Infrastructure: This firm is focused on transport and underground engineering, reporting healthy order inflows, especially in marine and urban-transport packages. It is progressing on several complex underground works and has a notable overseas presence.
• Hindustan Construction Company (HCC): Involved in constructing dams, tunnels, and bridges, HCC reported steady progress on key metro and underground projects, including the inauguration of Mumbai Metro underground stations and advancements on Patna Metro packages.

Valuations and Investment Outlook

Valuations vary, with Larsen & Toubro trading above its 10-year median EV/EBITDA. Ircon International also shows a significantly higher multiple than its historical average. Afcons Infrastructure and HCC, however, trade near their long-term medians despite strong Return on Capital Employed (ROCE), suggesting the market is assessing future growth and execution risks differently for each company. Identifying businesses with strong returns at reasonable valuations remains key.

Future Expectations

The ongoing push for urban transit and underground mobility is expected to sustain demand. Investors should closely examine order book quality, execution pace, financial health, and current valuations for individual companies, as performance will depend on execution excellence and financial discipline over long project cycles.

Impact

• This trend significantly benefits engineering, construction, and infrastructure companies, potentially driving revenue growth and profitability.
• It signals robust opportunities for specialized firms in tunnel boring and complex civil engineering.
• The expansion contributes to urban development, improved connectivity, and potential job creation.
• Impact rating: 8/10

Difficult Terms Explained

• EPC: Engineering, Procurement, and Construction. A type of contract where a company handles all aspects of a project from design to completion.
• PSU: Public Sector Undertaking. A government-owned corporation.
• EV/EBITDA: Enterprise Value to Earnings Before Interest, Taxes, Depreciation, and Amortization. A valuation metric used to assess a company's total value relative to its operating performance.
• ROCE: Return on Capital Employed. A profitability ratio that measures how efficiently a company is using its capital to generate profits.
• TBM: Tunnel Boring Machine. A specialized machine used to excavate tunnels.