HEC Infra Projects Limited — Q2 FY26 earnings call

Call held 17 Nov 2025

Management summary

HEC Infra Projects Limited delivered strong Q2 FY26 results, with revenue up 96.84% YoY to INR 40.82 crores and net profit up 82.10% YoY to INR 2.33 crores, supported by robust order inflows of INR 62.53 crores. The company is strategically focusing on profitable, short-to-medium tenure projects and expanding into new areas like battery energy storage systems. While working capital days increased and government receivables remain a challenge, management is actively working on improving financial structures and aims to reduce the cost of debt from 9.1% to 8.5% or lower in the next quarter.

Highlights

  • Revenue grew 96.84% YoY to INR 40.82 crores, demonstrating strong operational execution.

  • EBITDA came in at INR 3.86 crores, translating into a healthy margin of 9.45%.

  • Net profit increased significantly by 82.10% YoY to INR 2.33 crores.

  • New order inflows totaled INR 62.53 crores, including a strategic entry into the battery energy storage system segment.

  • Management is actively pursuing a 50-50 balance between government and private orders, with increased private sector wins this year.

Concerns

  • Working capital days increased to approximately 123 days from 76 days, though management stated no distress.

  • Receivables from government entities, particularly for older projects and final retention amounts, can take 1-1.5 years to realize.

  • The expected increase in non-fund-based credit limits, anticipated in Q2, was delayed and is now expected next quarter.

Key financials

  1. Revenue ₹40.82 Cr +96.8%YoY
  2. EBITDA ₹3.86 Cr
  3. EBITDA Margin 9.4%
  4. Net Profit ₹2.33 Cr +82.1%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

Inflow this quarter

₹62.53 Cr

Composition

  • EPC (66 kV substation & underground cable) (contract type) ₹28.75 Cr
  • Battery Energy Storage System (product) ₹7.15 Cr
  • Municipal Corporation (Water distribution) (client type) ₹26 Cr

Pipeline

other

Bidding for bigger projects, including joint ventures, with a pipeline similar to previous year after accounting for growth.

The company continues to strengthen its order book with new project wins and is actively bidding for larger projects, including joint ventures, while maintaining a focus on profitable growth.

Source: Prepared remarks

Capital allocation

high confidence
  • Debt Debt disclosed Cost 9.1%
    • Rate reset Negotiating with banks to reduce cost of debt from 9.1% to 8.5% or lower.
    So, basically, I think we are at 9.1%. And with the new rating, we are negotiating with the bank and we are hoping it comes down to somewhere around 8.5% or maybe lower. That is what the target is as of now.
  • Liquidity Liquidity disclosed Working capital days increased from 76 to approximately 123 days. Received INR 17 crores in payments in early April. Management states no working capital crunch or issue with revenue recoveries, despite high receivables (INR 28-32 crores) from government entities for older projects.
    we had reported working days of 76 days. And I think this time it has gone up to around 123 days, right? ... we received a lot of payments to the tune of almost INR 17 crores in the first week of April. ... But we do not have any major debtors since the last three to four years, which is going more than 180 days. ... So, we do not have any working capital crunch or any issue with recoveries of our revenue, if that is the question you are asking, sir.

Guidance & targets

Margin

  • EBITDA Margin Margin · annual basis · High confidence maintain profitability around current levels, with slight fluctuations (0.5% dip or boost)
    See, I think since last one year, since this last March results, we have been very clear about that we will be maintaining the profitability of the company, irrespective of the top line. So, the profitability of the company in terms of percentage shall remain somewhere around here only. It may increase a little. It may decrease a little. By little, I mean like maybe half a percentage dip here or there. Or maybe a 0.5% boost depending on how the quarter has gone. But on an overall picture, like I always tell, you should monitor a company on an annual basis. And I think you will see similar or better results than last year. That is what I can tell you.

    — Rahul Shah

Growth

  • Overall Growth Rate Growth · next three to four years · High confidence 50%
    this cautiousness, even with this cautiousness, we are growing at 50%. So, I think this can be maintained at least for the next three to four years.

    — Rahul Shah

Debt

  • Cost of Debt Debt · next quarter · High confidence 8.5% or lower

    Previously 9.1% → 8.5% or lower

    So, basically, I think we are at 9.1%. And with the new rating, we are negotiating with the bank and we are hoping it comes down to somewhere around 8.5% or maybe lower. That is what the target is as of now. And I think, like I said before, we are already in talks with the bank and we hope to give all the investors good news by this next quarter.

    — Rahul Shah

Credit Limits

  • Non-Fund Based Limits Credit Limits · next quarter · High confidence increased limits reflected in balance sheet
    No, I think it will be done very shortly. It will be done very shortly. We hope to give some good news and I think you will be seeing it in the balance sheet probably the next quarter.

    — Rahul Shah

Revenue Mix

  • Government vs. Private Order Mix Revenue Mix · near future · Medium confidence 50-50 balance
    And like I always say before, we always try to get at a 50-50 balance between the government and the private side. So, that is how we are planning to go forward in the near future.

    — Rahul Shah

What to watch in Q3 FY26

Cost of Debt Reduction

next quarter
Current 9.1%
Target 8.5% or lower

Why it matters

Reduction in cost of debt will directly improve profitability and financial health.

So, basically, I think we are at 9.1%. And with the new rating, we are negotiating with the bank and we are hoping it comes down to somewhere around 8.5% or maybe lower. That is what the target is as of now. And I think, like I said before, we are already in talks with the bank and we hope to give all the investors good news by this next quarter.

Risks & concerns

  • Government Receivables Delays

    medium

    Payments for older government projects and final retention amounts can take 1-1.5 years to realize due to internal departmental processes, impacting cash flow.

    Management acknowledged

  • Financing for Larger/Long-Tenure Projects

    medium

    Venturing into larger projects (e.g., >220 kV) or those with long tenures (beyond 2 years) presents significant financial challenges, which the company is currently avoiding until its finances are sorted.

    Management acknowledged

  • Manpower Availability and Quality

    medium

    Having the right people, from engineering to workmen, is identified as a major challenge for any EPC company, including HEC Infra.

    Management acknowledged

  • Competition in New Segments (Green Hydrogen)

    low

    Tenders in the Green Hydrogen Mission are currently not viable due to fierce competition and low scale, leading the company to selectively avoid such bids.

    Management acknowledged

Q&A highlights

5 direct
Increase in Loans and Advances Direct
all the advances are going for manufacturing of all electrical equipment that are being procured for our clients at the end of the day. So, all loans and advances do go towards that. And a small portion, a very small portion is going towards the subcontractors that work for us.

Clarifies the purpose of the significant increase in loans and advances, linking it to operational needs and denying related-party transactions.

Asked by Harshal Mehta

Focus on Profitability vs. Growth Direct
we are basically not booking any and every project. Like we currently had opportunities to book around projects of directly single projects of INR 100-200 crores. But we have chosen not to do that particularly in the previous quarter because we do focus on margin.

Reaffirms management's commitment to profitable growth, even if it means foregoing larger projects that do not meet margin criteria.

Asked by Harshal Mehta

Working Capital Distress and Receivables Partial
we had reported working days of 76 days. And I think this time it has gone up to around 123 days, right? ... But we do not have any major debtors since the last three to four years, which is going more than 180 days. ... So, we do not have any working capital crunch or any issue with recoveries of our revenue, if that is the question you are asking, sir.

Addresses concerns about negative operating cash flow and high receivables by explaining payment timing and government process delays, while denying overall working capital distress.

Asked by Nishit Srivastav

Increase in Non-Fund Based Credit Limits Partial
No, I think it will be done very shortly. It will be done very shortly. We hope to give some good news and I think you will be seeing it in the balance sheet probably the next quarter. So, it will be as soon as that. We were expecting it to happen in the 2nd Quarter, but sadly, it did not happen because our renewal dates and certain parameters on the banks were not there.

Provides an update on a key financing initiative, explaining the delay and setting expectations for its completion in the next quarter, which is crucial for future growth.

Asked by Nishit Srivastav

Sustainability of 45-50% YoY Growth Direct
this cautiousness, even with this cautiousness, we are growing at 50%. So, I think this can be maintained at least for the next three to four years.

Management provides a clear outlook on growth, indicating that the current 50% growth rate is sustainable for the medium term, emphasizing cautious and profitable expansion.

Asked by Nishit Srivastav

Diversification from Government Revenue Direct
we have significantly increased orders from the private side as well compared to the previous years. And like I always say before, we always try to get at a 50-50 balance between the government and the private side. So, that is how we are planning to go forward in the near future.

Highlights the company's strategy to balance its revenue streams and reduce over-reliance on government projects, which is a common risk in the construction sector.

Asked by Pooja Mishra

Green Hydrogen Mission Opportunities Partial
currently, there is good growth in Green Hydrogen Mission, but the tenders that we bid were not actually that viable because they went on a very much on a lower scale. So, competition right now is also very fierce at the same time, but then we always sit out in these situations.

Reveals the current challenges in the Green Hydrogen sector, indicating that while it's a strategic area, current opportunities are not meeting profitability criteria due to intense competition.

Asked by Ashay Shinde

Quality Control and Risk Management Improvements Direct
what we have done is that we have taken the quality control in hands of the HO, basically. We have centralized it. So, a lot of things are being centralized which were not centralized before. And this does actually enable us to give improved quality of work and products that we give to our clients.

Details specific operational improvements made to enhance project quality and mitigate risks, addressing past execution challenges.

Asked by Dhanraj Solani

3 min read 7 chapters

Detailed narrative

Strong Q2 FY26 Financial Performance

HEC Infra Projects Limited reported robust financial results for Q2 FY26, with revenue reaching INR 40.82 crores, marking a significant year-on-year growth of 96.84%. The company's EBITDA stood at INR 3.86 crores, translating into a healthy margin of 9.45%. Net profit also saw substantial growth, increasing by 82.10% year-on-year to INR 2.33 crores, reflecting effective operational execution.

Strategic Order Inflows and Diversification

The company secured new projects worth INR 62.53 crores during the quarter, including a INR 7.15 crore order for a battery energy storage system, marking its first major entry into this emerging segment. Other key wins included a INR 28.75 crore EPC contract for a 66 kV substation and over INR 26 crores in water distribution projects. Management is actively working to achieve a 50-50 balance between government and private orders, having significantly increased private sector orders this year.

Focus on Profitable Growth and New Market Opportunities

HEC Infra's strategy centers on selective project participation, prioritizing short-to-medium tenure projects with healthy margins, and declining larger projects (INR 100-200 crores) if profitability is not assured. The company is expanding into new opportunity areas such as battery energy storage systems and solar integrated power infrastructure, aligning with India's renewable energy goals. Additionally, it aims to strengthen its water infrastructure capabilities, leveraging opportunities from the Jal Jeevan Mission and state-level projects.

Working Capital and Receivables Management

Working capital days increased to approximately 123 days from a previous 76 days, partly attributed to the timing of payments, with INR 17 crores received in early April. While management denies any working capital distress, they acknowledge that receivables from government departments, particularly for older projects (pre-2022) and final retention amounts, can take 1-1.5 years to realize. The company is now focusing on targeting departments with faster payment cycles to mitigate this challenge.

Debt Optimization and Credit Limit Enhancement

The company is actively negotiating with banks to reduce its average cost of debt from the current 9.1% to a target of 8.5% or lower, with an update expected next quarter. Furthermore, an increase in non-fund-based credit limits, which was anticipated in Q2 but delayed due to renewal processes, is now expected to be finalized and reflected in the balance sheet next quarter, enabling more aggressive project pursuits.

Operational Excellence and Quality Control Initiatives

Post-COVID, HEC Infra has focused on structuring its finances and improving operational processes, including upgrading accounting systems and centralizing quality control at the Head Office. These initiatives have led to improved quality of work, adherence to clear-cut quality plans, and safety protocols, addressing past execution delays and enhancing overall project delivery.

Cautious and Sustainable Growth Outlook

Management reiterated its commitment to profitable growth, aiming to maintain the current 50% growth rate for the next three to four years. This growth will be pursued cautiously, with careful consideration of debt levels and project selection. While the Green Hydrogen Mission presents opportunities, current tenders are often not viable due to fierce competition and low scale, leading the company to be selective in its bidding.

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