HEC Infra Projects Limited — Q1 FY26 earnings call

Call held 18 Aug 2025

Management summary

HEC Infra Projects reported a strong Q1 FY26, with significant year-on-year growth in total income, EBITDA, and net profit, driven by new order wins totaling INR 55.77 crores. The company is strategically focusing on transmission, distribution, and water infrastructure, while also exploring opportunities in Battery Energy Storage Systems (BESS) and backward integration into transformer manufacturing. Management emphasized a shift towards short-tenured, high-return EPC projects and a balanced client base of public and private entities, with a conservative revenue target of INR 175 crores for FY26.

Highlights

  • Total income of INR 27.91 crores, up 52.91% YoY.

  • EBITDA of INR 2.61 crores, up 80.97% YoY, with EBITDA margin expanding 145 bps to 9.35%.

  • Net profit of INR 1.33 crores, up 59.37% YoY, and EPS of INR 1.23, up 50% YoY.

  • Secured INR 55.77 crores in new orders during Q1 FY26, with an unexecuted order book of INR 220-230 crores.

  • Management expects annual EBITDA and PAT to improve due to working capital cycle improvements and strategic focus on high-margin sectors.

Concerns

  • Management noted that Q1 revenue growth of 52.91% is not sustainable every quarter, advising investors to focus on annual performance.

  • Delays are expected in 50% of the order book comprising government projects due to external factors like land allotment, which are planned for.

Key financials

  1. Total Income ₹27.91 Cr +52.9%YoY
  2. EBITDA ₹2.61 Cr +81%YoY
  3. EBITDA Margin 9.3%
  4. Net Profit ₹1.33 Cr +59.4%YoY
  5. Net Profit Margin 4.8%
  6. EPS ₹1.23 +50%YoY

What they filed

Q1 FY27: revenue up 11.5%, net profit up 3.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue20 28 47 28 41 +102%57 +108%51 +9%31 +12%
EBITDA1 3 8 3 4 +200%5 +87%9 +18%3 +5%
Net profit1 1 6 1 2 +81%3 +104%6 +8%1 +3%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Order book

high confidence

Total value

₹220 Cr

as of 2025-06-30 range

Inflow this quarter

₹55.77 Cr

Execution

average around 15-15 months for overall projects, 6 to 12 months for prioritized short-tenured projects

Composition

Mix 2 client types
  • Private 50%
  • Government 50%

Share of order book by client type

Cancellations & deferrals

  • deferred: Delays expected in 50% of government projects due to external factors like land allotment.
Management aims to grow the unexecuted order book to INR 250-300 crores by year-end, focusing on short-tenured, high-return EPC projects.

Source: Prepared remarks · Q&A

Capital allocation

high confidence
  • Debt Debt disclosed Cost 9.2%
    Our prime banker is Bank of India. And we are enjoying a limit of approximately, a total limit of INR44 crores of which INR17 crores is cash limit and the remaining is non-fund based limit, right? So, INR27 crores of non-fund based limit and INR17 crores of fund based limit is what we are enjoying with our prime banker. The interest rate is at 9.15% for our cash limits and the remainder margins are at 1% for bank, sorry, at 0.75% for bank guarantee.
  • M&A Transformer manufacturers Acquisition · Announced

    To enhance backbone integration, optimize costs, improve margins, and ensure timely deliveries of long-lead time components.

    Looking ahead, we are focused on several strategic initiatives, selective acquisitions of low voltage and medium voltage transform manufacturers to enhance our backbone integration, optimize costs, and improve margins... I think by the next quarter, we will be having a verdict as to whether we will be exploring or expanding into that domain or not.

Guidance & targets

Revenue

  • Total Revenue Revenue · FY26 · Medium confidence INR 160-175 crores
    I think the targeted turnover for this year, looking to these current limits, somewhere around INR160 crores to INR175 crores is what we are looking at as in the top line, total revenue.

    — Rahul Shah

  • Total Revenue (conservative) Revenue · FY26 · High confidence INR 175 crores
    on a conservative side, like I said, if we, let's say, if we do not get any enhancement from the bank, like I said, so we are targeting somewhere around INR175 crores of revenue this year.

    — Rahul Shah

Order Book

  • Unexecuted Order Book Order Book · by year-end (FY26) · Medium confidence INR 250-300 crores
    we hope that by year end we have maybe INR250 crores to INR300 crores of unexecuted order book.

    — Rahul Shah

Profitability

  • Annual EBITDA and PAT Profitability · FY26 · High confidence Improvement
    But what I can say is that our annual EBITDA and PAT will probably improve this year as well, as we have had drastic improvements in our working capital cycles and as in the working limits.

    — Rahul Shah

Order Book Execution

  • Execution of Q1 FY26 Inflow Order Book Execution · FY26 · Medium confidence ~60%
    from the current INR55 crores, I think around 60% of the orders will be executed in this year 60% value is how we would see it in that way

    — Rahul Shah

Capital Allocation

  • Preferential Issue Capital Allocation · FY27 · Low confidence Next year
    we are looking for a preferential issue maybe in the coming future that is going to happen maybe next year is how we are looking at it.

    — Rahul Shah

What to watch in Q2 FY26

Verdict on transformer manufacturing backward integration

Next quarter
Current Scoping/feasibility stage
Target Decision on whether to pursue or not

Why it matters

This decision could impact supply chain, project timelines, and future strategic direction, potentially reducing reliance on long-lead time components.

I think by the next quarter, we will be having a verdict as to whether we will be exploring or expanding into that domain or not.

Risks & concerns

  • Execution delays in government projects

    medium

    50% of the order book comprises government projects where delays are expected due to external factors like land allotment, but these are planned for.

    Management acknowledged

  • Capital intensive nature of the industry and reliance on bank financing

    medium

    Growth targets are dependent on bank enhancements and maximizing the debt ceiling before considering equity, which is a capital-intensive industry.

    Management acknowledged

Q&A highlights

7 direct
Most important subsectors for growth in next 3-5 years. Direct
majority of our work is being focused towards transmission and distribution sector and a certain portion to the water pumping and water treatment side as well. So, these two are the major sectors that we are currently focusing on and we are also exploring new types of projects as new projects are upcoming in the market specifically relating to battery energy storage systems.

Clarifies strategic focus areas and potential new growth avenues for the company.

Asked by Kushal Kasliwal

Geographic expansion strategy for transmission and distribution. Direct
The industry that we are in, it is not an industry where sticking to one particular state or one particular location is going to be beneficial for us... in other states, we do find better terms and conditions in terms of payments and in terms of less competition as well.

Explains the rationale for a multi-state approach beyond Gujarat and Haryana, driven by competitive advantages and market opportunities.

Asked by Kushal Kasliwal

Details of working capital and non-fund based limits. Direct
Our prime banker is Bank of India. And we are enjoying a limit of approximately, a total limit of INR44 crores of which INR17 crores is cash limit and the remaining is non-fund based limit... The interest rate is at 9.15% for our cash limits and the remainder margins are at 1% for bank, sorry, at 0.75% for bank guarantee.

Provides crucial details on the company's financing structure, available limits, and cost of capital.

Asked by Kushal Kasliwal

Sustainability of Q1 revenue growth and margin guidance. Partial
I would suggest our investors to look at the returns on an annual basis or the profitability on an annual basis rather than focusing on a quarter-to-quarter basis... our annual EBITDA and PAT will probably improve this year as well.

Management clarifies that quarterly fluctuations are normal due to project cycles and reiterates annual improvement guidance, managing investor expectations.

Asked by Swapnil Kabra

Strategy for water infrastructure given Jal Jeevan Mission. Direct
if you look at what we are working under, we are not working in the Jal Jeevan Mission. The Jal Jeevan Mission is particularly focused in rural and semi-urban areas where the main target of the mission is to basically just get water to doorsteps of households... So, that is the current target of the government. And looking to this, I think we have a lot to work upon as a nation.

Distinguishes the company's water projects from the specific scope of the Jal Jeevan Mission, indicating a broader focus on water infrastructure.

Asked by Abhishek Sharma

Backward integration into transformer manufacturing and its impact. Direct
Main goal: timely deliveries. Components like circuit breakers, insulators have 12-16 month lead times. If they can cater to these demands, people willing to pay premium for expedited deliveries.

Reveals the strategic rationale behind potential backward integration is primarily to de-risk the supply chain and improve project execution timelines, rather than just margin expansion.

Asked by Abhishek Sharma

Prioritization of projects when multiple are running in parallel. Direct
all projects are prioritized equally and we have dedicated a team managing all these timelines in terms of deliveries of the material and in terms of execution... priority of what material is required at what stage and looking to its lead time. All material is basically planned out.

Explains the company's project management approach, emphasizing equal priority for all clients and material-based planning to ensure timely execution.

Asked by Priya Jain

Plans for a preferential issue to fund growth. Direct
we are looking for a preferential issue maybe in the coming future that is going to happen maybe next year is how we are looking at it... The target is to basically maximize the debt ceiling first and then go for a preferential issue and first to generate growth from the debt portion that can still be enhanced.

Provides insight into the company's long-term funding strategy, prioritizing debt utilization before equity dilution.

Asked by Kushal Kasliwal

3 min read 6 chapters

Detailed narrative

Strong Q1 FY26 Financial Performance

HEC Infra Projects reported robust financial results for Q1 FY26, with total income reaching INR 27.91 crores, marking a 52.91% year-on-year growth. EBITDA increased by 80.97% to INR 2.61 crores, and the EBITDA margin expanded by 145 basis points to 9.35%. Net profit grew 59.37% to INR 1.33 crores, resulting in an EPS of INR 1.23, up 50% from the previous year. Management advised focusing on annual performance rather than quarterly fluctuations due to project cycles, expecting overall annual EBITDA and PAT improvement.

Significant Order Inflow and Pipeline Growth

The company secured new orders worth INR 55.77 crores in Q1 FY26, including projects from Brixo Industries, Blue Pine Energy, Narmada Water Resources, EPI, and Ahmedabad Municipal Corporation. This inflow contributes to an unexecuted order book of INR 220-230 crores, which management aims to grow to INR 250-300 crores by year-end. Approximately 60% of the Q1 inflow is expected to be executed within FY26, with an average project cycle of 15-15 months, though prioritized projects have 6-12 month execution cycles.

Strategic Focus on Transmission, Distribution, and Water Infrastructure

HEC Infra Projects is prioritizing transmission, distribution, and water pumping/treatment sectors for future growth, noting a significant opportunity due to a shortfall of skilled EPC vendors. While the company has a strong presence in Gujarat and Haryana, it aims for multi-state expansion to leverage better terms and less competition. The focus in new states will primarily be on power substations and transmission lines, with all projects prioritized equally through dedicated teams and material-based planning.

Exploration of BESS and Backward Integration for Supply Chain Resilience

The company is actively exploring opportunities in Battery Energy Storage Systems (BESS), both as an EPC contractor and potentially through a BOOT model, with a verdict on the latter expected next quarter. Additionally, HEC is evaluating backward integration into manufacturing of long-lead time components like transformers, circuit breakers, and insulators. This initiative is driven by the need for timely deliveries and to mitigate supply chain risks, rather than solely for margin enhancement, as some components have lead times of 12-16 months.

Capital Allocation Strategy and Funding Outlook

HEC Infra Projects operates with a total banking limit of INR 44 crores from Bank of India, comprising INR 17 crores in cash limits at 9.15% interest and INR 27 crores in non-fund based limits at a 0.75% bank guarantee margin. Management is applying for enhancements to these limits and aims to maximize debt utilization before considering a preferential equity issue, possibly next year, to fund its capital-intensive growth. The company's conservative revenue target for FY26 is INR 175 crores, contingent on bank enhancements.

Renewable Energy Sector Opportunities

HEC Infra Projects sees significant and consistent growth in the renewable energy sector since 2012-2014, expecting this trend to continue for the next 5-10 years due to government aggression towards non-fossil fuel energy. The company is actively working with private renewable clients like Tata Power, Juniper Green, and Blue Pine, and has executed one green hydrogen project as an EPC contractor, despite limited government tenders in this nascent space.

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