Morgan Stanley picks these stocks that are gaining from India’s capex boom

Morgan Stanley said that India's infrastructure and capex is witnessing a boom owing to projects like PM Gati Shakti. The brokerage firm chose Larsen & Toubro, NTPC, Titagarh Rail Systems and Ultratech Cement as key stocks benefitting from the government spend on infrastructure.

India's infrastructure development has seen over the last decade is projected to continue, Morgan Stanley said in a note. Analysts expect infrastructure investments to rise from 5.3 percent of GDP in FY24 to 6.5 percent of GDP by FY29, reflecting a robust 15.3 percent compound annual growth rate (CAGR), it said.

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These are Morgan Stanley's stock picks:

1. Larsen & Toubro (L&T)

According to Morgan Stanley, increased government spend on infrastructure projects will likely benefit L&T and an overall improvement in the economy will also be a positive driver for L&T.

2. NTPC

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As per Morgan Stanley, potential upside for NTPC includes faster capacity addition driven by stronger power demand and improving health of State Electricity Boards (SEBs), value-accretive acquisitions, and value unlocking in subsidiaries.

3. Titagarh Rail Systems

For Titagarh Rail Systems, Morgan Stanley said that there are strong earnings visibility from a large backlog and improving return ratios. The foreign brokerage said that an acceleration in passenger segment margins beyond expectations would further enhance the company's financial performance.

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4. Ultratech Cement

Morgan Stanley said that medium-term demand visibility for Ultratech Cement remains strong owing to continued demand and a sharp decline in input prices.