H.G. Infra Engineering Limited — Q1 FY26 earnings call

Call held 14 Aug 2025

Management summary

H.G. Infra Engineering Limited reported a mixed Q1 FY26, with standalone revenue of ₹1,709 crores and consolidated revenue of ₹1,482 crores. While the company achieved a significant milestone by monetizing 5 HAM assets for ₹3,584 crores EV, profitability was impacted by a ₹43 crore margin correction on the Ganga Expressway project. The order book stands strong at ₹14,656 crores, with strategic diversification into non-road sectors gaining momentum, and management reiterated FY26 revenue guidance of ₹7,000 crores despite current quarter margin pressures.

Highlights

  • Strategic diversification into railways, metro, renewable energy, and transmission projects, aiming for 30-40% of order book from non-road sectors.

  • Successful monetization of 5 HAM assets to Neo Infra Income Opportunities Fund for an enterprise value of ₹3,584 crores, against an equity investment of ₹767 crores, yielding a 1.8x return.

  • Secured first transmission project worth ₹350 crores and an additional 300 MW BESS project from GUVNL, bringing cumulative BESS capacity to 735 MW (1,470 MWh).

  • Strong order inflow target of ₹11,000 crores for FY26, with a robust bidding pipeline across road, railway, BESS, and transmission sectors.

  • Confidence in achieving full-year revenue guidance of ₹7,000 crores for FY26 and maintaining EBITDA margins of 15-16% in subsequent quarters.

Concerns

  • Q1 FY26 standalone PAT margin declined to 7.34% from 9.27% in Q1 FY25, and consolidated PAT margin to 6.7% from 10.64% in Q1 FY25.

  • EBITDA margin was impacted by a ₹43 crore correction related to a change in law for the Ganga Expressway royalty revision, which is not expected to be realized soon.

  • Delays in appointed dates for several HAM projects (e.g., Varanasi-Ranchi, Ayodhya) and LOA for Nagpur-Chandrapur due to land acquisition issues.

  • Solar project debt funding has 83% sanctioned but only 60% disbursed, creating a 30% gap between physical progress and financial drawdowns.

Key financials

  1. Standalone Revenue ₹1,709 Cr
  2. Standalone EBITDA ₹236 Cr
  3. Standalone EBITDA Margin 13.8%
  4. Standalone PAT ₹125 Cr
  5. Standalone PAT Margin 7.3%
  6. Consolidated Revenue ₹1,482 Cr
  7. Consolidated EBITDA ₹258 Cr
  8. Consolidated EBITDA Margin 17.5%
  9. Consolidated PAT ₹99 Cr
  10. Consolidated PAT Margin 6.7%
  11. Standalone Gross Debt ₹1,049 Cr

What they filed

Q1 FY27: revenue down 46.9%, net profit down 77.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,064 1,509 1,973 1,709 1,154 +8%1,450 −4%1,354 −31%907 −47%
EBITDA174 250 283 236 147 −16%224 −10%127 −55%77 −67%
Net profit89 137 212 125 67 −25%97 −29%100 −53%28 −78%
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

₹14,656 Cr

as of 2025-06-30 quantified

Inflow this quarter

₹700 Cr

Composition

Mix 4 segments
  • Roads and Highways 65.7%
  • Railways and Metro 19.9%
  • BESS 11.1%
  • Solar 3.4%

Share of order book by segment

Pipeline

qualified rfp

Bidding pipeline across HAM, EPC, Railways, BESS, and Transmission

The company is strategically diversifying its order book, aiming for 30-40% from non-road sectors over the next 2-3 years, and has a strong bidding pipeline.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex Capex disclosed
    So we are having almost very good gross block and we have the projects which we are almost completing. So this entire fleet of our construction equipment is free to be deployed to sufficient to about INR8,000, INR9,000 crores of project.
  • Debt Gross ₹1,049 Cr
    On a standalone basis, our gross debt stands at INR1,049 crores. This comprises of INR664 crores working capital debt and other term loans and maturities.
  • M&A 5 HAM assets (Raipur-Visakhapatnam corridors OD-5, OD-6, AP-1 and Khammam-Devarapalle Package 1 and 2) Divestment · Signed · Consideration ₹[object Object] (undisclosed)

    Strengthen balance sheet, reduce leverage, enhance financial flexibility, redeploy funds into new HAM bids, road expansion, or other high-return infrastructure opportunities.

    Enterprise value of ₹3,584 crores. Total equity invested was ₹767 crores, against which the company will receive ₹1,384 crores (EV less debt of ₹2,200 crores), implying a 1.8x return on equity.

    We executed a binding offer document with Neo Infra Income Opportunities Fund. Under this agreement, our holdings company, H.G. will sell 100% of its equity stake in the five wholly owned subsidiaries managing this HAM assets. The enterprise value of the entire transaction is at INR3,584 crores and the total equity invested in these and the total debt obligation of all five assets are at INR767 crores and INR2,200 crores, respectively.
  • Liquidity Cash ₹162 Cr Debtors stand at ₹1,350 crores, including ₹170 crores in retention and deposit. Mobilization advance is ₹382 crores.
    So stand-alone cash and bank balance is how much, sir? It's INR162 crores. ... And debtor of INR1,350 crores there is a retention and deposit of about INR170 crores. ... Mobilization advance is how much, sir? INR382 crores.

Guidance & targets

Order Inflow

  • Total Order Inflow Order Inflow · FY26 · High confidence ₹11,000 crores
    We are confident aiming for order inflow of around INR11,000 crores in FY26

    — Harendra Singh

  • Road Sector Project Amount Order Inflow · FY26 · High confidence ₹6,000 crores
    The company plans to pursue bids worth INR1 lakh crores in HAM and EPC segment, targeting project amount of at least INR6,000 crores in FY26

    — Harendra Singh

  • Railway Sector Project Amount Order Inflow · Current financial year · High confidence ₹1,500 crores
    The company is actively pursuing railway and metro opportunities, aiming to secure projects worth approximately INR1,500 crores in the current financial year.

    — Harendra Singh

  • BESS Order Inflow Order Inflow · FY26 · High confidence ₹2,000 crores
    For FY26, the estimated order inflow for BESS is approximately INR2,000 crores, which includes one secured project, which we already has bagged around INR800 crores.

    — Harendra Singh

  • Transmission & Distribution Project Amount Order Inflow · This year · High confidence ₹1,000 crores
    at H.G., we aim to secure transmission and distribution projects worth INR1,000 crores at least for the year and one we have already has bagged is INR350 crores.

    — Harendra Singh

Revenue

  • Total Revenue Revenue · FY26 · High confidence ₹7,000 crores
    It remains same. It is around INR7,000 crores of -- because we did around 13.5% year-on-year for the quarter 1 and almost will remain in this range only.

    — Harendra Singh

  • Total Revenue Revenue · FY27 · High confidence ₹8,000 crores
    Yes. That would be around INR8,000 crores, right.

    — Harendra Singh

Profitability

  • EBITDA Margin Profitability · Next three quarters · High confidence 15-16%
    So for next three quarters, we should be back to 15%, 16% margin levels? Yes.

    — Harendra Singh

Order Book Composition

  • Non-Road Sector Contribution Order Book Composition · Next two, three years · Medium confidence 30-40%
    our goal is to derive around 30% to 40% of order book from known road sectors over the next two, three years.

    — Harendra Singh

Asset Monetization

  • HAM Asset Monetization Completion Asset Monetization · FY26 · High confidence Within this financial year
    We expect to conclude these formalities and expect to conclude the transaction within this financial year.

    — Harendra Singh

Equity Infusion

  • Remaining HAM Equity Equity Infusion · Next 9 months of FY26 · High confidence ₹298 crores
    Out of the remaining, INR298 crores is scheduled to be done in 9 months of FY26

    — Harendra Singh

  • Remaining HAM Equity Equity Infusion · FY27 · High confidence ₹183 crores
    followed by INR183 crores in FY27

    — Harendra Singh

  • Remaining HAM Equity Equity Infusion · FY28 · High confidence ₹186 crores
    and INR186 crores in FY28.

    — Harendra Singh

  • BESS Equity Equity Infusion · FY26 · High confidence ₹119 crores
    of which around INR1 crore has already been infused and balance INR119 crore is anticipated to be done within this financial year and the BESS in financial year '27 and '28, respectively.

    — Harendra Singh

  • Transmission Equity Equity Infusion · FY26 · High confidence ₹10 crores
    This year, INR10 crores.

    — Harendra Singh

  • Transmission Equity Equity Infusion · FY27 · High confidence ₹25 crores
    Next year, INR25 crores

    — Harendra Singh

  • Transmission Equity Equity Infusion · FY28 · High confidence ₹52 crores
    and further INR52 crores in FY28.

    — Harendra Singh

BESS

  • Annual Revenue from BESS BESS · Upon completion and commissioning · High confidence ₹225 crores
    Upon completion and commissioning of all these BESS projects, company expects annual revenue of INR225 crores from BESS.

    — Harendra Singh

  • Commissioning of BESS Projects BESS · Nov '26 and Dec '26 · High confidence November '26 and December '26
    The scheduled commissioning that is in November '26 and December '26, respectively.

    — Harendra Singh

What to watch in Q2 FY26

HAM Asset Monetization Completion

Within FY26
Current Binding offer signed, compliances initiated
Target Transaction concluded

Why it matters

Crucial for strengthening the balance sheet, reducing leverage, and freeing up capital for new projects.

We expect to conclude these formalities and expect to conclude the transaction within this financial year.

Risks & concerns

  • EBITDA margin compression due to change in law

    medium

    Q1 EBITDA margin impacted by a ₹43 crore correction for Ganga Expressway royalty revision, which is not expected to be realized soon.

    Management acknowledged

  • Delays in appointed dates and LOA for HAM projects

    medium

    Land acquisition issues (e.g., Nagpur-Chandrapur at 42% vs 70% required) are delaying LOA and appointed dates for several HAM projects.

    Management acknowledged

  • Lag in solar project debt disbursement

    low

    Despite 83% debt sanction for solar projects, only 60% has been disbursed, creating a 30% gap with physical progress.

    Management acknowledged

Q&A highlights

5 direct, 1 evasive
HAM asset monetization valuation Direct
It's not -- I think 1.8x, not 0.8x. You see the number, it's INR3,584 crores of enterprise value, out of which INR2,200 crores is the debt. So the net amount which we will be getting is INR1,384 crores against the equity investment of INR767 crores.

Clarifies the significant return on equity from the HAM asset sale, indicating strong value creation.

Asked by Shravan

Q1 EBITDA margin compression Direct
So I think the reason behind for -- 2.5% of the EBITDA correction has been there. So there is one of the items, which we were expecting that change in law in Ganga Expressway, so the change in law of royalty revision is there. So in this project of Adani, we are eligible to get anything variation like change in law and variation is U.S. from the client, whatever is being approved by the client. ... So we have corrected our number around INR40 crores. So because of that number, there is a deep correction in the EBITDA margin.

Explains the specific reason for the margin dip in Q1, attributing it to a one-time correction related to a change in law for the Ganga Expressway project.

Asked by Vaibhav Shah

Confidence in FY26 revenue guidance of ₹7,000 crores Direct
So if you can see here, the projects which we are at very advanced stage of completion like Ganga, like Orissa, all OD-5, 6, AP-1, KD-1, 2 and even Karnal, they are the projects, these whatever is the balance would be completed. So this is the one thing which is and again, the solar and some significant part of that execution is likely to contribute within this year only. ... So this gives -- put together that we would be around INR7,000 crores even if we are not considering anything to be coming from Nagpur-Chandrapur projects.

Provides a detailed breakdown of projects expected to contribute to the FY26 revenue, reinforcing confidence in the guidance despite current challenges.

Asked by Veenit

Solar project debt disbursement status Partial
No, no. See, the sanction to disbursement, there is a gap. We have only taken the disbursement at about 60%, though we have progressed -- at around 58% roughly, though we have progressed around 80% 78%. So, there is a deficit. There is a gap of about 30% in what we have progressed to what we have -- the loan has been disbursement -- the loan disbursement has been done.

Highlights a potential working capital strain or delay in project funding, as disbursement lags physical progress despite sanctions.

Asked by Vishal

BESS project cost and potential margin upside Direct
You are probably very much correct. I think there is a bit of a correction, which we have seen in the last six months, eight months only. And what we have estimated at the cost which are going to be there and the discovery which -- of the price which we are now negotiating at. So there is upside chances that we would be having at least 10% upside in the margin front.

Indicates potential for improved margins on BESS projects due to recent corrections in battery prices and ongoing negotiations.

Asked by Vishal

Tax implications of HAM asset monetization Evasive
We have not worked out yet.

Management has not yet assessed the tax implications of a significant asset sale, which could impact the net proceeds.

Asked by Mohit

Future asset monetization and maintenance work Direct
No. No. It's outright selling the asset out. That's an outright transaction. ... No. No. We are not doing any maintenance work in these projects. This is outright selling the project.

Clarifies the company's strategy for HAM assets is outright sale, not a build-operate-transfer model with ongoing maintenance, and identifies Karnal Ring Road as the next potential asset for monetization.

Asked by Mohit

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Detailed narrative

Q1 FY26 Financial Performance Overview

H.G. Infra Engineering Limited reported standalone revenue of ₹1,709 crores and consolidated revenue of ₹1,482 crores for Q1 FY26. Standalone EBITDA stood at ₹236 crores with a margin of 13.79%, while consolidated EBITDA was ₹258 crores with a margin of 17.52%. Standalone PAT was ₹125 crores (7.34% margin) and consolidated PAT was ₹99 crores (6.7% margin). The dip in consolidated figures is attributed to the elimination of intergroup transactions with solar SPVs, which are recorded as capital work-in-progress.

Order Book and Strategic Diversification

The company's total order book as of Q1 FY26 stands at ₹14,656 crores, comprising ₹9,623 crores from roads and highways, ₹2,912 crores from railways and metro, ₹1,620 crores from BESS, and ₹500 crores from solar. H.G. Infra aims to derive 30-40% of its order book from non-road sectors over the next 2-3 years. This quarter, the company secured its first transmission project worth ₹350 crores and an additional 300 MW BESS project, bringing cumulative BESS capacity to 735 MW (1,470 MWh).

HAM Asset Monetization

H.G. Infra executed a binding offer document with Neo Infra Income Opportunities Fund for the monetization of five HAM assets (Raipur-Visakhapatnam corridors OD-5, OD-6, AP-1 and Khammam-Devarapalle Package 1 and 2). The transaction has an enterprise value of ₹3,584 crores, with a total equity invested of ₹767 crores and debt obligation of ₹2,200 crores. The company expects to receive ₹1,384 crores against its equity, representing a 1.8x return. The transaction is expected to conclude within the current financial year, strengthening the balance sheet and providing capital for redeployment.

Solar and BESS Project Updates

For solar projects, 70 out of 183 plants are completed, contributing to a cumulative 700 MW DCS capacity. Debt funding for these projects is 83% sanctioned, with remaining approvals and disbursements expected in Q2 and Q3 FY26. For BESS, the company has a cumulative contracted capacity of 735 MW and expects annual revenue of ₹225 crores upon commissioning in November and December 2026. Equity requirement for BESS projects is ₹500 crores, with ₹1 crore infused and ₹119 crores anticipated this financial year.

Road and Railway Project Execution

Key EPC projects like Ganga Expressway are 97.4% complete, targeting 100% by Q2 FY26, and Delhi UER is completed. HAM projects like Karnal Ring Road are 77.1% complete, and Raipur-Visakhapatnam corridors are progressing towards 100% completion by Q3 FY26. In railways, DMRC is 82% complete, targeting 100% within three months, and New Delhi railway station's appointed date was declared on August 6, 2025, with execution starting by Q2 FY26 end. Land acquisition remains a challenge for new HAM projects like Nagpur-Chandrapur, with LOA expected by December.

Margin Impact and Outlook

The Q1 FY26 EBITDA margin was impacted by a ₹43 crore correction related to a change in law for the Ganga Expressway royalty revision, which is not expected to be realized soon. This accounted for a 2.5% correction in EBITDA. Excluding this, other projects are performing as per expected margins. Management is confident of normalizing EBITDA margins to 15-16% in the next three quarters and reiterated the FY26 revenue guidance of ₹7,000 crores, supported by advanced-stage projects and new railway/solar/BESS contributions.

Capital Allocation and Debt Management

The company's standalone gross debt stands at ₹1,049 crores, primarily comprising working capital debt. Equity requirements for remaining HAM projects total ₹1,664 crores, with ₹997 crores already infused and ₹298 crores planned for the next 9 months of FY26. Equity for BESS and transmission projects is also planned over FY26-FY28. The HAM asset monetization is a key capital allocation event, providing significant funds for deleveraging and future growth without substantial new capex, as the existing equipment fleet is sufficient for upcoming projects.

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