💰 Financial Performance

Revenue Growth by Segment

Revenue is dominated by Tollway Collection which contributed 73% in FY25 and increased to 78% in H1 FY26. EPC Infra contributed 23% in FY25 (declining to 20% in H1 FY26), while Real Estate and Others accounted for 4% in FY25 (2% in H1 FY26). Total revenue grew from INR 266.48 Cr in FY23 to INR 402 Cr in FY24 (a 50.8% increase) and reached INR 495.7 Cr in FY25.

Geographic Revenue Split

The company has a presence across 11 states and 1 Union Territory, with a strong historical concentration in Madhya Pradesh (Indore). It is actively expanding into high-growth states including Assam, Gujarat, and Daman & Diu to diversify its regional footprint.

Profitability Margins

PAT margins improved from 4.39% in FY23 to 4.70% in FY24. In H1 FY26, the PAT margin saw a significant jump to 7.4% compared to 2.5% in H1 FY25, driven by a 192% YoY increase in PAT to INR 16.9 Cr. Gross margins for H1 FY26 stood at 16.5% compared to 8.9% in H1 FY25.

EBITDA Margin

EBITDA margin for H1 FY26 was 11.3%, a significant improvement from 5.6% in H1 FY25. This 102% YoY growth in EBITDA (INR 25.8 Cr vs INR 12.7 Cr) is attributed to lower raw material costs and reduced finance costs. Management targets an EBITDA range of 8-12% for FY27-28.

Capital Expenditure

The company maintains an asset-light model in real estate but requires significant capital for EPC and toll deposits. Networth increased to INR 211.1 Cr as of September 2025 from INR 117.7 Cr in March 2025, providing a cushion for planned expansions without major debt-funded capex.

Credit Rating & Borrowing

CRISIL reaffirmed 'CRISIL BBB/Positive' for long-term and 'CRISIL A3+' for short-term facilities. Borrowing costs are declining as the debt-to-equity ratio improved from 0.61x in March 2025 to 0.28x in September 2025. Interest coverage is comfortable at approximately 4.5 to 5 times.

⚙️ Operational Drivers

Raw Materials

Key raw materials include bitumen, steel, cement, and other construction aggregates required for EPC projects. While specific percentage splits per material are not disclosed, they constitute the bulk of the COGS which was INR 190.3 Cr in H1 FY26.

Import Sources

Sourced primarily from domestic suppliers within India, particularly in states where projects are executed such as Madhya Pradesh and Gujarat, to minimize logistics costs.

Key Suppliers

Not disclosed in available documents, though the company maintains established relationships with a diversified base of local suppliers and customers.

Capacity Expansion

HIL has completed 90+ projects and has 25+ ongoing projects. It is expanding its execution capacity to target an order book of INR 1,000 Cr by the end of FY26, up from the current ~INR 775 Cr.

Raw Material Costs

COGS as a percentage of revenue decreased significantly in H1 FY26, supporting a gross profit of INR 37.5 Cr (up 86.6% YoY). Procurement strategies focus on passing on government-led SEZ benefits and raw material cost reductions to improve margins.

Manufacturing Efficiency

Execution efficiency is critical as 60-65% of revenue is typically booked in Q3 and Q4 due to the seasonal nature of construction and contract billing cycles.

📈 Strategic Growth

Expected Growth Rate

27%

Growth Strategy

HIL aims to achieve growth by aggressively bidding for new contracts (25% success ratio) to reach a INR 1,000 Cr order book. It is shifting focus toward higher-margin EPC projects (12-13% margin) over toll management (5-5.5% margin) and expanding geographically into Assam and Gujarat.

Products & Services

Roads, bridges, and building construction (EPC); Toll collection management services; Residential housing (PMAY); Commercial real estate leasing and hospitality properties.

Brand Portfolio

Karuna Sagar, Neww York City (Residential Real Estate projects).

New Products/Services

Venturing into newer infrastructure models beyond HAM (Hybrid Annuity Model) and expanding commercial real estate lease rentals to create steady annuity-like revenue streams.

Market Expansion

Targeting high-growth states like Assam, Gujarat, and Daman & Diu to reduce geographic concentration in Madhya Pradesh.

Strategic Alliances

Collaborates with government departments including NHAI, MPIDC, AICTSL, and Indore Municipal Corporation for work orders.

🌍 External Factors

Industry Trends

The industry is shifting toward technological advancements in tolling (FASTag, NPCI) which enhances user experience and collection efficiency. The National Highway network has grown 60% since 2014, creating a massive tailwind for maintenance and tolling contracts.

Competitive Landscape

Intense competition in the construction and tolling sectors requires aggressive bidding, which historically restricted HIL's operating margins to around 7%.

Competitive Moat

Moat is built on 20+ years of promoter experience and established relationships with government bodies. This provides a 'start-up benefit' when venturing into newer infrastructure models, though the moat is subject to intense competition.

Macro Economic Sensitivity

Highly sensitive to government infrastructure spending. The Union Budget 2025-26 allocated INR 2.87 lakh crore to MoRTH (up 2.4% YoY), which directly impacts HIL's tender pipeline.

Consumer Behavior

Rapid urbanization and population growth are increasing vehicular traffic, which directly drives revenue growth in the Tollway Collection segment.

Geopolitical Risks

Minimal direct exposure as operations are domestic, but macro-economic shifts affecting interest rates impact finance costs for capital-intensive projects.

⚖️ Regulatory & Governance

Industry Regulations

Operations are governed by NHAI and MoRTH regulations for road construction and tolling. Compliance with PMAY guidelines is required for residential projects.

Taxation Policy Impact

The company incurred a tax expense of INR 5.5 Cr in H1 FY26 on a PBT of INR 22.4 Cr, representing an effective tax rate of approximately 24.5%.

Legal Contingencies

HIL was previously noted for non-cooperation with Brickwork Ratings in 2020 due to non-furnishing of information. No other specific pending court cases or values were disclosed.

⚠️ Risk Analysis

Key Uncertainties

Revenue is 100% dependent on winning tenders; failure to win new bids would significantly impact revenue visibility. Cyclicality in the construction industry remains a core risk.

Geographic Concentration Risk

Historically concentrated in Madhya Pradesh, though currently present in 11 states to mitigate regional economic downturns.

Third Party Dependencies

High dependency on government departments (NHAI, MPIDC) for contract awards and timely clearance of monthly bills (30-45 days).

Technology Obsolescence Risk

The shift toward electronic tolling requires ongoing integration with NPCI and FASTag systems to maintain collection efficiency.

Credit & Counterparty Risk

Receivables are generally from government entities, which are considered low credit risk, though payment delays can impact working capital cycles.