💰 Financial Performance

Revenue Growth by Segment

Not disclosed by segment; total revenue grew 79.74% YoY to INR 68.41 Cr in H1 FY26 from INR 38.06 Cr in H1 FY25. Q2 FY26 revenue stood at INR 40.50 Cr, a 102.1% increase YoY. This growth is driven by improved execution across multiple projects and consistent order inflows.

Geographic Revenue Split

Major revenue is derived from Gujarat (percentage not disclosed), with small portions realized from Haryana. High concentration in Gujarat exposes the company to regional site availability risks and state-specific budget reallocations, which can stall project execution.

Profitability Margins

Gross margins are not explicitly disclosed. EBITDA margin improved to 9.41% in H1 FY26 from 8.51% in H1 FY25. Net Profit margin stood at 5.18% in H1 FY26 compared to 5.29% in H1 FY25. The company prioritizes profitability over volume, refusing low-margin projects to protect these margins.

EBITDA Margin

EBITDA margin was 9.41% in H1 FY26, up 90 basis points YoY. EBITDA grew 94.88% YoY to INR 6.47 Cr from INR 3.32 Cr. This improvement reflects a disciplined project management approach and a focus on high-margin SITC services.

Capital Expenditure

Historical and planned capital expenditure figures are not disclosed in the available documents.

Credit Rating & Borrowing

The long-term rating remains 'Negative' due to modest scale and high working capital intensity. Interest costs rose 71.28% YoY to INR 1.61 Cr in H1 FY26. The company is negotiating with banks for better rates in Q3 FY26 to improve its interest coverage ratio, which has a target of above 1.50 times for a rating upgrade.

⚙️ Operational Drivers

Raw Materials

Specific raw material names are not disclosed; however, they are related to SITC (Supply, Installation, Testing, and Commissioning) services for power and infrastructure.

Capacity Expansion

Current installed capacity and planned expansion metrics are not disclosed as the company operates as an EPC service provider.

Raw Material Costs

Raw material costs were INR 36.42 Cr in H1 FY26, representing 53.2% of total income. This is an increase from INR 23.58 Cr in H1 FY25. Fluctuations in these costs directly impact project profitability as many EPC contracts have limited escalation clauses.

Manufacturing Efficiency

Efficiency is reflected in the order book to sales ratio of 2.63 times as of June 2022, providing medium-term revenue stability despite some slow-moving orders (INR 20 Cr with no progress).

Logistics & Distribution

Distribution and other expenses stood at INR 23.60 Cr in H1 FY26, up from INR 10.41 Cr in H1 FY25. These costs are significant for transporting heavy equipment to diverse project sites.

📈 Strategic Growth

Expected Growth Rate

45-50%

Growth Strategy

Growth is pursued through selective bidding for high-margin projects, refusing low-margin contracts of INR 100-200 Cr. The company is also diversifying geographically by expanding into states like Haryana to reduce its reliance on Gujarat and targeting departments with faster internal billing processes.

Products & Services

SITC (Supply, Installation, Testing, and Commissioning) services and EPC (Engineering, Procurement, and Construction) projects for power transmission, roads, and buildings.

Brand Portfolio

HEC Infra Projects Limited.

Market Expansion

Actively exploring and working in states beyond Gujarat, such as Haryana, to diversify the revenue base and mitigate regional concentration risks.

🌍 External Factors

Industry Trends

The EPC sector is highly fragmented and competitive. Trends show a shift toward 'over the time' revenue recognition (Ind-AS 115) and a focus on technical qualifications like 'Class A' registrations to filter competition.

Competitive Landscape

Highly fragmented and competitive construction sector with tender-driven operations, requiring technical expertise to maintain a niche in SITC services.

Competitive Moat

The moat consists of experienced technical promoters and 'Class A' registrations with the Gujarat Government and CPWD. This is sustainable as long as the company maintains its technical standards and promoter support through unsecured loans.

Macro Economic Sensitivity

High sensitivity to government infrastructure spending and GDP growth. A reduction in infrastructure investment would lead to fewer project opportunities and increased competition.

Consumer Behavior

Not applicable as the company operates in the B2B and B2G infrastructure segments.

Geopolitical Risks

Not disclosed, but global supply chain issues could impact the procurement of specialized electrical components for SITC projects.

⚖️ Regulatory & Governance

Industry Regulations

Operations are governed by the Roads and Building Department of the Government of Gujarat and CPWD standards. Maintaining 'Class A' and 'Class-1' registrations is critical for bidding eligibility.

Taxation Policy Impact

The effective tax rate for H1 FY26 was approximately 25.6% (INR 1.23 Cr tax on INR 4.79 Cr PBT).

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the working capital cycle; a gross operating cycle above 180 days and delayed billing from clients like GETCO (1-1.5 years for final 10%) significantly strain liquidity.

Geographic Concentration Risk

Major revenue is concentrated in Gujarat, exposing the company to regional economic and site-specific risks.

Third Party Dependencies

Dependency on government departments for project approvals and final billing, which can delay cash flows by over a year.

Technology Obsolescence Risk

Not disclosed, but the company must keep pace with evolving power infrastructure technologies to maintain its SITC service edge.

Credit & Counterparty Risk

Exposure to government entities like GETCO provides high credit quality but poor payment velocity, impacting the company's debt coverage indicators (Total Debt/GCA target below 5 times).