Comparative analysis of pro fitability of real estate, industrial construction and infrastructure firms: evidence from India Edison Jolly Cyril and Harish Kumar Singla School of General Management, National Institute of Construction Management and Research, Pune, India Abstract Purpose – This study aims to identify the most profitable segment of construction firms amongst real estate, industrial construction and infrastructure. This paper also examines the determinants of profitability of real estate, industrial construction and infrastructure firms. Design/methodology/approach – The data of 67 firms (20 real estate, 21 industrial construction and 26 infrastructure) is collected for a 15-year period (2003–2017). Two models are created using total return on assets (ROA) and return on invested capital (ROIC) as dependent variables.. Leverage, liquidity, age, growth, size and efficiency of the firm are identified as firm-specific independent variables. Two economic variables, i.e. growth in GDP and inflation, are also used as independent variables. Initially, the models are tested for stationarity, multicollinearity and heteroscedasticity, and finally, the coefficients are estimated using Arellano–Bond dynamic panel data estimation to account for heteroscedasticity and endogeneity. Findings – The results suggest that industrial construction is the most profitable segment of construction, followed by real estate and infrastructure. Their profitability is positively driven by liquidity, efficiency and leverage. The real estate firms are somewhat less profitable compared to industrial construction firms, and their profitability is positively driven by liquidity. The infrastructure firms have low ROA and ROIC. Originality/value – The real estate, infrastructure and industrial construction drastically differ from each other. The challenges involved in real estate, infrastructure and industrial construction are altogether different. Therefore, authors present a comparative analysis of the profitability of real estate, infrastructure and industrial construction segments of the construction and compare their determinants of profitability. The results provided in the study are robust and reliable because of the use of a superior econometric model, i.e. Arellano–Bond dynamic panel data estimation with robust estimates, which accounts for heteroscedasticity and endogeneity in the model. Keywords Profitability, Infrastructure, Construction, Real estate, Liquidity, Leverage Paper type Research paper 1. Introduction In this competitive business environment, sustained business performance is very important and to achieve this, firms are required to develop, implement and maintain strategies that have a positive influence on their performance (Alarussi and Alhaderi, 2018). Though the performance of a firm can be measured using financial and non-financial measures, the financial measures such as revenue, sales volume or turnover, profit margin, returns on investment, profit per employee, growth in revenue and growth in number of employees (Bacidore et al., 1997) are more popular than the non-financial measures. Amongst the available financial measures, profitability is most commonly used measure. Profitability is defined as “a positive difference between revenue and cost”. It is the barometer by which the Profitability of real estate 273 Received 26 August 2019 Revised 28 November 2019 31 January 2020 9 March 2020 2 April 2020 14 April 2020 Accepted 14 April 2020 Journal of Financial Management of Property and Construction Vol. 25 No. 2, 2020 pp. 273-291 © Emerald Publishing Limited 1366-4387 DOI 10.1108/JFMPC-08-2019-0069 The current issue and full text archive of this journal is available on Emerald Insight at: https://www.emerald.com/insight/1366-4387.htm