HECPROJECT

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.

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.

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.

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.

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.

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.