Highway Infrastructure IPO

The company operates across three main sectors: tollway collection, EPC infrastructure, and real estate, which helps spread its revenue streams. In FY25, toll collection contributed 77.14%, EPC Infra 21.28%, and real estate 1.58% of its total revenue.

It holds a significant order book of ₹666.3 crore as of May 31, 2025. This includes ₹59.53 crore from tollway collection and ₹606.77 crore from EPC Infra business, providing future revenue visibility.

The company has a strong track record, having successfully completed 27 tollway collection projects and currently operating 4. It also manages business operations in 7 different states as of FY25.

The company has shown steady financial improvement, with its profit increasing at an annual rate of 27.40% from ₹13.8 crore in FY23 to ₹22.4 crore in FY25.

The company’s debt-to-equity ratio is 0.61, meaning it uses ₹61 of debt for every ₹100 of its own funds. This is lower than IRB Infrastructure Developers (1.04) and H.G. Infra Engineering (1.39), showing it relies less on borrowed money than those larger firms. However, it does use more debt than Udayshivakumar Infra, whose ratio is 0.36.

The company uses Automatic Number Plate Recognition (ANPR) technology for toll collection, which improves efficiency and user experience. This adoption of Electronic Toll Collection (ETC) systems helps streamline operations and reduce traffic congestion.

The company benefits from an experienced management team, including promoters with nearly 30 years of industry experience. Their extensive market knowledge and strong execution capabilities are vital for current projects and future growth.

Highway Infrastructure relies heavily on government projects, especially from the National Highways Authority of India (NHAI), for its tollway collection and EPC businesses. In FY25, ₹453.98 crore (nearly 90%) of its revenue came from public sector customers.

Its business requires a lot of capital, and insufficient cash flow could hinder debt payments and working capital needs. In FY25, its total outstanding fund-based borrowings were ₹71.81 crore.

As of FY25, the company had ₹79.6 crore in contingent liabilities, potential financial obligations that the company hasn’t set aside cash to cover yet. If these liabilities turn into actual expenses, they could hurt the company’s finances.

In FY25, the company had a negative operating cash flow of ₹4.95 crore, which means it spent more cash on running its day-to-day business than it earned. This happened mainly due to higher inventory and unpaid customer bills. If this continues, it could create challenges in meeting regular expenses and debt payments.

The company itself will not receive any money from the sale of shares by its promoters in the IPO, meaning that portion of the offer does not bring new funds into the company for its operations.

The industry is highly competitive, with 134 pre-qualified bidders for NHAI tollway projects. This fragmented market leads to aggressive pricing, which can squeeze HIL's profit margins and challenge its market share.

Operating in a highly regulated sector, the company faces risks from policy changes and the need for timely license renewals. Past delays in statutory payments occurred, and future non-compliance could lead to regulatory actions or penalties.