HGINFRA - H.G. Infra Engg.

📊 NSE: HGINFRA 🏢 Construction 📅 Last Updated: 12/13/2025 22:46

💰 Financial Performance

Revenue Growth by Segment

Standalone revenue grew 18.16% to INR 6,051.88 Cr in FY25. Segmental order book contribution: Highways (66%), Railways (19%), and Solar/BESS/Metro (15%).

Geographic Revenue Split

Geographically diversified across 13-15 states in India, mitigating regional execution risks and adverse local developments.

Profitability Margins

Standalone PAT margin stood at 9.5% in FY25, down from 10.7% in FY24. H1FY26 PAT margin further moderated to 6.7% due to higher finance costs and changing segment mix.

EBITDA Margin

EBITDA margin was 15.7% in FY25, a slight decrease from 16.0% in FY24. Q2 FY26 margin dipped to 12.7% due to increased site expenses and segment diversification.

Capital Expenditure

Planned capital expenditure of INR 75-100 Cr for FY2026, primarily for equipment and machinery to support execution ramp-up.

Credit Rating & Borrowing

Credit rating reaffirmed at AA- (Positive) by ICRA and CARE. Borrowing costs are supported by a strong interest coverage ratio of over 8 times.

⚙️ Operational Drivers

Raw Materials

Bitumen, cement, and steel represent the primary raw materials. Cost of materials consumed was INR 1,220.83 Cr in H1FY26, accounting for 42.6% of standalone revenue.

Capacity Expansion

Order book of INR 14,656 Cr as of June 30, 2025, provides 2.4x revenue visibility relative to FY25 income.

Raw Material Costs

Raw material costs increased 1.6% YoY in H1FY26 to INR 1,220.83 Cr. Procurement strategies focus on bulk sourcing for large-scale EPC projects.

Manufacturing Efficiency

Demonstrated efficiency through early completion bonuses and maintaining EBITDA margins ~2-3% above the industry average of 13%.

Logistics & Distribution

Contract and site expenses, including logistics, rose to INR 1,027.74 Cr in H1FY26, representing 35.9% of revenue.

📈 Strategic Growth

Expected Growth Rate

12-15%

Growth Strategy

Growth will be achieved by diversifying into Solar EPC, BESS, and Transmission (non-highway share rose from 0% in FY22 to 34% in 2025) and recycling capital through the monetization of 5-6 completed HAM assets to fund new bids.

Products & Services

EPC services for roads, highways, bridges, railway tracks, metro rail, solar power plants, and battery energy storage systems (BESS).

Brand Portfolio

H.G. Infra Engineering Limited (HGINFRA).

New Products/Services

New segments include Solar power generation and Battery Energy Storage Systems (BESS), with non-highway works now contributing 34% of the total order book.

Market Expansion

Expanding PAN India presence across 15+ states and entering new sectors like airports, water, and ropeways.

Strategic Alliances

Collaborations with Adani Group, Tata Projects, and IRB; JVs like HGIEPL-MGCPL (dissolved Jan 2025).

🌍 External Factors

Industry Trends

The industry is shifting toward green energy and multi-modal transport; HGINFRA is positioning itself by increasing its non-highway order book from 0% in FY22 to 34% in 2025.

Competitive Landscape

Stiff competition in road EPC from players like IRB and Tata Projects, leading to potential pressure on new order inflow margins.

Competitive Moat

Moat is built on a 20-year execution track record and cost leadership, evidenced by EBITDA margins consistently 200-300 bps higher than peers.

Macro Economic Sensitivity

Highly sensitive to government infrastructure budgetary allocations; 99% of revenue is dependent on public sector spending.

Consumer Behavior

Not applicable for B2B/G infrastructure services.

Geopolitical Risks

Trade barriers or supply disruptions for solar cells and lithium-ion batteries could delay project timelines in the renewable segment.

⚖️ Regulatory & Governance

Industry Regulations

Operations are governed by NHAI/MoRTH contractual standards and pollution norms for construction machinery; discontinuation of Atmanirbhar Bharat concessions has impacted liquidity.

Taxation Policy Impact

Effective tax rate of approximately 25%, with tax expenses of INR 64.39 Cr on PBT of INR 257.16 Cr in H1FY26.

Legal Contingencies

Exposed to contingent liabilities in the form of bank guarantees for performance and mobilization advances; no history of guarantee invocation reported.