HEC Infra Projects Limited — Q4 FY25 earnings call

Call held 26 May 2025

Management summary

HEC Infra Projects Limited reported robust Q4 and FY25 results, driven by strong execution and strategic project selection. Full-year revenue grew 46.69% to ₹113.15 crores, with net profit up 95.99% to ₹9.25 crores. The company's unexecuted order book stands at ₹202.78 crores, providing good visibility, and management guided for 30-40% revenue growth in FY26. Key risks include government project delays, geopolitical instability, and future labor availability.

Highlights

  • FY25 Total Income grew by 46.69% YoY to ₹113.15 crores.

  • FY25 Net Profit surged by 95.99% YoY to ₹9.25 crores, with EPS at ₹9.08.

  • Q4 FY25 EBITDA margin significantly improved to 18.98%, an expansion of 1207 basis points YoY.

  • Strong unexecuted order book of ₹202.78 crores provides revenue visibility for coming quarters.

  • Secured new orders including ₹6.07 crores from Agarwal Metalworks and ₹12.5 crores from Ahmedabad Municipal Corporation.

Concerns

  • Potential delays in government projects, with one project already delayed by 1-2 years due to right-of-way issues.

  • Geopolitical instability identified as a risk that could lead to project closures, with insurance being explored as a mitigation.

  • Future labor availability in the Western region of India is a concern, prompting plans to secure a major workforce.

Key financials

2 periods

Q4 FY25

  • EBITDA Margin
    19%
  • Net Profit
    ₹5.67 Cr
    YoY +2,093.5%

FY25

  • Total Income
    ₹113.15 Cr
    YoY +46.7%
  • EBITDA
    ₹15 Cr
    YoY +74.3%
  • Net Profit
    ₹9.25 Cr
    YoY +96%
  • EPS
    ₹9.08
    YoY +95.3%

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

₹202.78 Cr

as of 2025-03-31 quantified

Inflow this quarter

₹28.07 Cr

Execution

Majority (70-80%) of current order book expected to be completed within the financial year, with execution cycles of 6-12 months for high-return EPC projects.

Composition

Mix 2 client types
  • Government 70%
  • Private/Corporate 30%

Share of order book by client type

Pipeline

L1 awaiting loa

Actively bidding for projects under PM Kusum, Green Hydrogen Mission, RDSS, and other state/central programs. L1 in some tenders awaiting LOI.

Cancellations & deferrals

  • deferred: One project under Rail Vikas Nigam Limited (RVNL) delayed by 1-2 years due to right-of-way issues (land not cleared by government).
The company manages its order book by anticipating delays and booking orders accordingly, aiming for short-tenure, high-return EPC projects.

Source: Prepared remarks

Capital allocation

medium confidence
  • Debt Debt disclosed
    • Rate reset Reduction in bank banking costs due to new banking approvals and lower rates offered.
    Currently, we are only focused on debt financing. I can say that we are not actively or pursuing any such other fundraising plans unless, like, let's say we have talked with someone, we get a good opportunity. But we are not actively searching for any such fundraising, like you mentioned. Currently, we are looking to debt financing only.
  • M&A Low-voltage and medium-voltage transformers manufacturers Acquisition · Announced

    To enhance backward integration, optimize costs, and improve margins.

    Selective acquisitions of low-voltage and medium-voltage transformers manufacturers to enhance our backward integration, optimize costs and improve margins... But as of now, we have no concrete plans, like you mentioned. We don't have any deadlines for any such acquisition. And we are still basically searching for two things. One is the feasibility of these projects. So we are working on that as to what product to actually select and then what company to maybe have a tie up with or maybe invest in.
  • Liquidity Liquidity disclosed Company manages cash flow by ensuring timely payments from clients, especially due to MSME rules, and by streamlining financing costs.
    So first thing is that the challenge that you mentioned is of, let's say, the cash flow or maybe the execution time and all of that factoring in. So we do it by only two to three things that the company needs to take care about. And we are already working behind that. One was improving your financing and financing costs. And basically streamlining and putting caps on your debt financing. So we have done all of that... payments are being done in time. And like rarely in a year, maybe we may have a crunch for, let's say, a month or something, but we barely feel that right now because of the MSME rules that are there in place.

Guidance & targets

Revenue

  • Revenue Growth Revenue · FY26 · High confidence 30-40%
    We expect at least 30% to 40% growth this year as well.

    — Rahul Shah

  • Long-term Revenue Aspiration Revenue · 3-5 years out · Medium confidence ₹500 crores
    Yes, of course we are. Yes, we are absolutely aiming for that. We are also aiming for our investors to basically earn a lot from what they have invested in and what they have put faith in. And we are very aggressive in terms of growth right now.

    — Rahul Shah

Margin

  • EBITDA Margin Margin · FY26 and coming years · High confidence similar to current
    So I think the EBITDA margin would remain almost similar only, right? So I don't think there will be much change in that. And I am not just talking about, let's say, this year or the next year. We foresee that the EBITDA margins will be maintained by the company over the coming years.

    — Rahul Shah

Order Book

  • Order Book Growth Order Book · this year · High confidence 30%
    So I think commenting on any pipeline for this year would be inappropriate. What I can say is that we will be growing the order book by 30% from the previous year is the target that I can approximately brief you about.

    — Rahul Shah

Project Duration

  • Maximum Project Duration Project Duration · future projects · High confidence less than 24 months
    That is why the company is targeting sectors and segments where project durations are less than preferably 24 months.

    — Rahul Shah

What to watch in Q1 FY26

FY26 Revenue Growth

FY26
Current FY25 growth of 46.69%
Target 30-40% growth

Why it matters

To verify if the company can achieve its ambitious growth target for the current fiscal year.

We expect at least 30% to 40% growth this year as well.

Risks & concerns

  • Labor availability in the future

    high

    Labor is seen as a critical asset that may become scarce in the Western region in 5 years; company is planning to secure a major workforce.

    The third and the major concern I think for any EPC company in the coming years is going to be labor. Labor is going to be an asset that after five years I don't think the Western region of India will be having. So looking to those such developments we are already planning to secure a major workforce over the coming years.

    Management acknowledged

  • Government project delays

    medium

    Delays in execution are part and parcel of government projects, with one RVNL project delayed 1-2 years due to right-of-way issues. Company accounts for this in order book management.

    So government delays are basically part and parcel of any government projects, irrespective of what any other EPC player tells you. They are a part of the business. So what we do is basically our order book is managed in such a way where these delays and anticipated execution dates are considered accordingly.

    Management acknowledged

  • Geopolitical instability leading to project closures

    medium

    Some situations may lead to closure of certain projects; company is exploring options for insurance against such events.

    The second thing is the geopolitical instability that is currently there. Some situations may lead to closure of certain projects as well. So that is there. And preparing for those contracts can be done maybe through basically having we need to be insured against such issues as well. So the company is exploring the option of getting insurance for such events as well.

    Management acknowledged

  • Execution challenges for larger projects (cash flow, liquidated damages)

    medium

    Company addresses these by improving financing, streamlining debt, and ensuring timely payments from clients (MSME rules).

    So first thing is that the challenge that you mentioned is of, let's say, the cash flow or maybe the execution time and all of that factoring in. So we do it by only two to three things that the company needs to take care about. And we are already working behind that. One was improving your financing and financing costs. And basically streamlining and putting caps on your debt financing. So we have done all of that.

    Analyst acknowledged

  • Raw material cost escalation

    low

    Mitigated by price variation clauses in contracts, especially for projects over 12 months, and by placing orders on a forefooting basis with advances to lock in prices.

    So in most of our projects, all the government projects that we are doing, we have price variation clauses... The second thing is that usual practice of the company is to place orders on a fore footing basis in the first month itself after receiving the order, where we give advances and close our price deals with the vendors in the same time. So we are not much concerned about the price variations as such.

    Management mitigated

Q&A highlights

7 direct
Order book execution timeline and revenue conversion Direct
I think majority of these orders, like I said, it should be completed in this financial year. We expect from the current order book at least 70% to 80%, somewhere between that would be the executed in this year.

Clarifies the execution velocity of the current order book, indicating strong revenue visibility for the upcoming year.

Asked by Saurab Singh

Client concentration risk and mitigation Direct
So see, government side, we are not worried very much about that. Let's say because this is a tendering process at the end of the day. So we basically do not have any such thing with the government where we, let's say the orders are basically given through our price bids and through our, basically the approval process of the government.

Addresses concerns about reliance on a few clients, particularly government, by highlighting the competitive tendering process and the company's reputation in private sectors.

Asked by Saurab Singh

Impact of raw material cost escalation on long-term projects Direct
So in most of our projects, all the government projects that we are doing, we have price variation clauses. In most of them, long execution times are expected. So any project with more than 12 months of tenure will have a price variation clause.

Explains how the company mitigates raw material price volatility through price variation clauses in contracts and proactive vendor agreements.

Asked by Saurab Singh

Reason for Q4 EBITDA margin spike and future sustainability Direct
Basically, madam, since it is a characteristic of our business that mostly our major execution is being executed in the last quarter only. Because all the government departments also wanted to book their budgets as well as their execution date is always 31st March.

Provides a clear explanation for the strong Q4 performance, attributing it to the seasonal nature of government project execution, which is a recurring pattern.

Asked by Yashwanti

Top risks for the company in the next year Direct
I think the three risks that the company sees, one is let's say the delay in executions... The second thing is the geopolitical instability that is currently there... The third and the major concern I think for any EPC company in the coming years is going to be labor.

Highlights management's identified key risks: execution delays, geopolitical instability, and future labor availability, along with their mitigation strategies.

Asked by Dhruv Kumar

Nature of 'other non-current financial assets' (INR36 crores) Partial
Sir, retention money, some deposits, security deposits and few other types of deposits are there. Basically, when we bid tender, we have given some bid securities in form of DDs as well. So all of that is considered in that. The EMDs that we pay basically or likewise

Clarifies a significant balance sheet item, indicating it primarily consists of retention money, deposits, and bid securities, which are common in the EPC sector.

Asked by Rohan Gupta

Sustainability of current high margins with increasing scale and competition Direct
Basically, the margins to be expected in the future, we don't see them declining because of two reasons. One is that the major factor is that the competitors, like you said, that when we are growing, we will be facing bigger competitors. So these big competitors are already there in the current projects as well.

Management asserts that margins are sustainable due to existing competition already being present and the company's improved bidding process and project selection.

Asked by Dhwanil Desai

Strategy for geographical expansion and managing associated risks Direct
So new territories, I'm sure that you will not see something like we'll be into like 20 states or maybe we'll have a Pan India presence or maybe in all states. You will not see something of that sort happening very soon or in the coming years. But what we'll be doing is there will be a structured growth. There will be an organic growth is that sees that you that feels organic to the natural.

Outlines a cautious, structured, and organic approach to geographical expansion, emphasizing risk assessment before entering new territories.

Asked by Dhwanil Desai

2 min read 6 chapters

Detailed narrative

Robust Financial Performance in FY25

HEC Infra Projects Limited delivered a strong financial performance in FY25, with total income reaching ₹113.15 crores, marking a 46.69% year-on-year growth. EBITDA increased by 74.25% to ₹15 crores, resulting in an EBITDA margin of 13.25%, an expansion of 210 basis points. Net profit surged by 95.99% to ₹9.25 crores, with EPS at ₹9.08. The fourth quarter of FY25 was particularly strong, with total income of ₹46.37 crores (up 63.53% YoY) and an EBITDA margin of 18.98% (up 1207 bps YoY), driven by the seasonal nature of government project execution.

Strong Order Book and Execution Strategy

The company closed FY25 with a robust order book of ₹326 crores, of which ₹202.78 crores remain unexecuted, providing significant revenue visibility. Management expects 70-80% of the current order book to be executed within the current financial year, with a focus on short-tenure, high-return EPC projects having execution cycles of 6-12 months. New orders secured in Q4 FY25 include ₹6.07 crores from Agarwal Metalworks and ₹12.5 crores from Ahmedabad Municipal Corporation, alongside a ₹9.5 crore order from Solar Craft Limited.

Strategic Growth Initiatives and Market Focus

HEC Infra Projects is strategically expanding its core transmission and distribution footprint, leveraging upcoming tenders in RDSS and grid modernization. The company is also scaling its water infrastructure capabilities to meet municipal and industrial demand. Furthermore, it is actively bidding for projects under national electrification initiatives like PM Kusum and the Green Hydrogen Mission. The company is also exploring battery energy storage systems, aiming to support India's renewable energy transition through BOOT and EPC models.

Risk Management and Operational Efficiency

Management acknowledges key risks such as government project delays, geopolitical instability, and future labor availability. To mitigate these, the company incorporates price variation clauses in long-term contracts, explores insurance for geopolitical risks, and plans to secure a major workforce. Operational efficiency is maintained through disciplined execution, strategic alignment, and streamlined processes, including managing multiple projects across locations with dedicated teams and automated procurement.

Geographical Expansion and Client Diversification

While the company's office is in Ahmedabad, its order book in Haryana has grown from ₹4 crores to approximately ₹60 crores. HEC Infra Projects aims for structured, organic growth in new territories, targeting states like Rajasthan and Maharashtra in the western and northern regions. The client base is diversified, with approximately 70% from government bodies and 30% from private corporates, including esteemed organizations like GETCO, HVPNL, and Tata Power Solar.

Capital Allocation and Future Outlook

The company is currently focused on debt financing and is not actively pursuing other fundraising plans. It is exploring selective acquisitions of low-voltage and medium-voltage transformer manufacturers to enhance backward integration, though no concrete plans are finalized. Management aims for a 30-40% revenue growth in FY26 and expects EBITDA margins to remain similar to current levels, aspiring to become a ₹500 crore revenue company in the next 3-5 years through aggressive, organic growth.

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