H.G. Infra Engineering Limited — Q2 FY26 earnings call

Call held 13 Nov 2025

Management summary

H.G. Infra Engineering reported a mixed Q2 FY26, marked by a robust order book of INR13,933 crores and significant progress in diversifying into new sectors like renewables and railways. The company successfully monetized 5 HAM assets for INR3,584 crores, aiming to deleverage and fund future growth. However, profitability was impacted by specific project provisions and increased debt, which management expects to normalize in coming quarters.

Highlights

  • Order book stood at INR13,933 crores as of September '25, providing strong revenue visibility.

  • Monetization of 5 HAM projects for an enterprise value of INR3,584 crores is expected to strengthen the balance sheet and reduce leverage.

  • Secured additional 300MW/600MWh BESS project, increasing cumulative contracted capacity to 735MW/1,470MWh.

  • Strategically entered new high-potential sectors such as solar energy, railways, battery storage, and transmission infrastructure.

  • Ganga Expressway project (INR4,800 crores) is 99% completed, with COD expected in the next few months.

Concerns

  • Standalone Q2 FY26 PAT margin declined to 5.8% from 8.3% in Q2 FY25.

  • Consolidated Q2 FY26 PAT margin declined to 5.7% from 8.9% in Q2 FY25.

  • Debt levels increased in Q2 due to advances to vendors (INR150 crores), mobilization advances (INR250 crores), and pending HAM bank disbursements (INR490 crores).

  • Margin hit of INR35 crores in Q2 FY26 (following INR40 crores in Q1 FY26) on the Ganga Expressway project due to a 'change in law' related to aggregate procurement.

Key financials

2 periods

Headline

  • Standalone Gross Debt
    ₹1,634 Cr

Q2 FY26

  • Standalone Revenue
    ₹1,154 Cr
  • Standalone EBITDA
    ₹147 Cr
  • Standalone EBITDA Margin
    12.7%
  • Standalone PAT
    ₹67 Cr
  • Standalone PAT Margin
    5.8%
  • Consolidated Revenue
    ₹905 Cr
  • Consolidated EBITDA
    ₹206 Cr
  • Consolidated EBITDA Margin
    22.8%
  • Consolidated PAT
    ₹52 Cr
  • Consolidated PAT Margin
    5.7%

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

₹13,933 Cr

as of 2025-09-30 quantified

Composition

Mix 3 segments
  • Roads and highways 56%
  • Rails and metros 20%
  • Renewables (total) 14%

Share of order book by segment· partial disclosure (90% of the book)

Pipeline

qualified rfp

Total bidding pipeline for the year including NHAI and Ministry

Cancellations & deferrals

  • deferred: MSRDC project delayed due to land acquisition issues, affecting execution timeline.
Management is confident in securing significant new orders from NHAI and private players to meet annual targets, despite H1 inflow being lower than expected.

Source: Prepared remarks

Capital allocation

high confidence
  • Debt Gross ₹1,634 Cr
    On a standalone basis, our gross debt stands at INR1,634 crores. This comprises INR550 crores in working capital debt, INR400 crores of NCD and INR684 crores on term debt, current maturities and trade limit.
  • M&A 5 HAM projects (Raipur-Visakhapatnam AP1, OD5, OD6; Khammam-Devarapalle 1, 2) Divestment · Signed · Consideration ₹[object Object] (undisclosed)

    Strengthen balance sheet, reduce leverage, enhance financial flexibility, and deploy funds into new HAM bids and other high-return infrastructure opportunities.

    Total investment in these 5 HAM assets is INR767 crores, and total debt obligations are INR2,200 crores. The transaction will deliver significant strategic benefits to the group by strengthening the balance sheet and reducing the leverage.

    During August '25, we executed a binding offer document with Neo Infra Income Opportunities Fund. Under this agreement, our holding company will sell 100% of its equity stake in these 5 wholly owned subsidiaries managing these HAM assets. ... The enterprise value of the transaction is INR3,584 crores. Total investment, equity investment and total debt obligations in all these 5 HAM assets are INR767 crores and INR2,200 crores, respectively.
  • Liquidity Liquidity disclosed Solar project debt funding is 89% sanctioned and 79% disbursed. The company borrowed from banks to mitigate the gap due to pending disbursements for solar projects.
    On the financial front, approximately 89% of the required debt funding has been sanctioned, where around 79% of the disbursement already done. The remaining disbursement and the further balance sanctions will happen after the commissioning of these installed plants. Due to these pending disbursements, we had borrowed from banks to mitigate the gap to complete the project on time.

Guidance & targets

Order Inflow

  • New Order Inflows Order Inflow · FY26 · High confidence INR10,000-11,000 crores
    Both targets have been set for FY '26, where we plan to secure INR10,000 crores to INR11,000 crores of new order inflows.

    — Harendra Singh

  • Transmission and Distribution projects Order Inflow · FY26 · High confidence INR1,000 crores
    In FY '26, in this H.G. Infra aims to secure transmission and distribution projects worth INR1,000 crores, already has secured 1 project valued at approximately INR350 crores.

    — Harendra Singh

Revenue

  • Revenue Revenue · FY26 · Medium confidence INR6,500-7,000 crores
    So definitely, we are not very much sure that we would be touching INR7,000, but something around INR6,500 crores to INR7,000 would be our number which by end of this year, we will be able to comfortably, we will be able to reach.

    — Harendra Singh

  • Revenue Revenue · FY27 · High confidence INR7,800-8,000 crores
    So with that, we are expecting that we will be touching around INR7,800 crores to INR8,000 crores in the coming year at about 15% growth as we have earlier estimated.

    — Harendra Singh

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

    — Harendra Singh

  • MSRDC project revenue Revenue · FY27 · High confidence >50% of INR4,000 crores
    FY '27, definitely, more than 50% would be done in FY '27, out of those total INR4,000 crores.

    — Harendra Singh

  • BESS project revenue Revenue · this year (FY26) · High confidence INR150-250 crores
    Yes. Around, I think, roughly around INR150 crores to INR250-odd crores would be done within this year only.

    — Harendra Singh

Profitability

  • EBITDA Margin Profitability · from Q3 onwards · Medium confidence 15-16%
    Okay. And now from the third quarter onwards, we should be having a 15% to 16% kind of EBITDA margin and that should continue for 2, 3 years?

    — Harendra Singh

Portfolio Mix

  • Non-road infrastructure portfolio share Portfolio Mix · by FY27 · High confidence 35%
    And by FY '27, we intend to expand our non-road infrastructure portfolio to around 35%.

    — Harendra Singh

Order Size

  • Initial Building Construction project size Order Size · initially · High confidence INR300-500 crores
    Not a big number. It would be initially at INR300 crores to INR500 crores.

    — Harendra Singh

What to watch in Q3 FY26

HAM Asset Monetization Completion

this quarter (Q3 FY26)
Current Share purchase agreement for OD6 executed, remaining 4 SPAs targeted this quarter.
Target Execution of remaining 4 SPAs for the 5 HAM projects monetization deal.

Why it matters

Completion of the monetization deal is crucial for strengthening the balance sheet, reducing leverage, and funding future growth opportunities.

Further to this, we have also executed the share purchase agreement of Raipur-Visakhapatnam OD6 Package project recently, and remaining 4 SPA is targeted to be executed in this quarter only.

Risks & concerns

  • Margin impact from 'change in law' on Ganga Expressway project

    medium

    A provision of INR35 crores in Q2 FY26 (following INR40 crores in Q1 FY26) was taken due to increased fees for aggregate procurement and royalty changes, which management may take to arbitration.

    Management acknowledged

  • Delays in NHAI order awarding

    medium

    New mandates requiring 80-90% land availability and focus on DPR quality are impacting the pace of NHAI order awarding, despite a strong pipeline.

    Management acknowledged

  • MSRDC project delays due to land acquisition

    medium

    The INR4,000-5,000 crore MSRDC project is delayed due to land acquisition issues, with management expecting the order to be given in 6-8 months.

    Management acknowledged

Q&A highlights

8 direct
Increase in Debt Levels Direct
So basically, there has been 3 significant areas where we have invested this debt -- increased debt. One is the advances to our vendors, that is around INR150 crores, we did into that because of procuring few of the core kind of material, which are required for debts and this thing. So mobilization advance also has been there, where INR250 crores of mobilization advance is there. ... So this I have explained into this remarks that the total around INR490 crores of debt is still to be received from the HAM bank's disbursement.

Management explained the specific reasons for the debt increase in Q2, attributing it to working capital needs and pending HAM disbursements, and indicated a potential normalization in Q3/Q4.

Asked by Vaibhav Shah

Margin Softness and Ganga Expressway Provision Direct
The margins were on track only. There are exceptionally a few of the projects, say, especially Ganga, where we have taken a hit because of the change in law, there is likely that we would be taking that to the arbitration. ... in the first quarter, it was around INR40 crores, and in the second quarter, it is around INR35 crores.

Management clarified that the margin compression was primarily due to a specific provision on the Ganga Expressway project related to a 'change in law,' quantifying the impact for Q1 and Q2, and indicating potential arbitration.

Asked by Vaibhav Shah

Order Inflow Target vs. H1 Performance Direct
So there are 2 big expectations, which we are expecting. One is definitely at NHAI. So nothing much has happened in first half and because of the land and the prequalification criteria and many more things with now everything because the approval of many projects, the bidding pipeline is very strong and they would be awarding in subsequent months. This is one area we believe. ... So the rail, roads and the private orders, which we believe that within the future, say, the further 3 to 4 months balance, we would be able to secure at around INR10,000 crores of orders.

Analyst questioned the low H1 order inflow against the annual target. Management expressed strong confidence in securing the remaining INR10,000 crores from NHAI and private players within the next 3-4 months due to a robust bidding pipeline.

Asked by Sarvesh Gupta

MSRDC Project Execution and FY27 Revenue Direct
So if you see the total order, if you just take out this order from MSRDC, would be -- balance would be around INR4,000 crores INR5,000 crores. So those are the orders, out of which almost everything needs to be done in FY '27 just bearing, I think, more -- not more than INR400 crores, INR500 crores, which would be out of -- just going beyond FY '27.

Analyst questioned how FY27 revenue targets would be met given the INR4,000-5,000 crore MSRDC project's delayed execution. Management clarified that a significant portion (>50%) of this project is expected to be executed in FY27, and new orders will have faster execution timelines.

Asked by Sarvesh Gupta

Timeline for HAM Asset Monetization Direct
So in all 5 projects, we have received the PCC and the NOC and other obligations, which we already have started. So we believe that the COD, as soon as we receive the COD as well as we as soon as we get the permission of NOC from the client, which will likely to take not more than 1 to 2 months maximum from now. So by January -- continuity in January or February, we would be doing 2 of the projects. And then March, all 3 balance projects would be done within the year only.

Management provided a clear timeline for the completion of the 5 HAM asset monetization, expecting 2 projects by Jan/Feb and the remaining 3 by year-end, contingent on receiving COD and NOC.

Asked by Uttam Srimal

NHAI Order Awarding Pipeline and Delays Direct
So we are expecting because of the land. So there is a mandate from the ministry as well as the finance that you should bid -- you should award those projects only where the 80% or 90% of the land as per the contract is available. ... So these are the 2 big things, which are impacting the bidding. Otherwise, the pipeline is very strong. So we are expecting, yes, definitely, it is taking time, but many projects, which they believe, and we are also expecting would be bidded within the financial year. And subsequently, I think there will be no delay in future years.

Management acknowledged the strong NHAI pipeline (INR6 lakh crores) but explained that bidding has been impacted by new mandates requiring 80-90% land availability and focus on DPR quality to reduce variations, causing delays but expecting projects to be bid within the financial year.

Asked by Mohit Kumar

New Sector Entry: Green Hydrogen and Building Construction Direct
As such, in the hydrogen because all the refineries, they have been mandated to deploy or just install this hydrogen plant, which require green power. So one of the projects which we already have bidded with the JV partner only in the Numaligarh Refinery, so that gives us that particular sense... As far as this is concerned, see, apart from this, if you are looking at the opportunity which are into building, residential building or commercial building. So we are looking into this opportunity once we have completed in Kanpur projects.

Management elaborated on its strategy for new sectors, detailing its approach to green hydrogen (bidding with JV for refinery projects, focusing on RE power) and building construction (targeting government and private projects post-Kanpur completion, initially INR300-500 crores).

Asked by Veenit Pasad

BESS Project Execution and FY26 Revenue Direct
Execution, we already have started where the land is in there and engineering being done and advances to transformer and GIS and other systems already have been placed. So we have already started commence into both the projects of BESS. ... Yes. Around, I think, roughly around INR150 crores to INR250-odd crores would be done within this year only.

Management confirmed that execution for BESS projects has commenced with land acquisition, engineering, and component orders, and provided a specific revenue guidance of INR150-250 crores from BESS for the current financial year.

Asked by Parth Thakkar

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Detailed narrative

Diversification and Strategic Expansion

H.G. Infra Engineering is actively transforming from a road-centric EPC company into a diversified infrastructure conglomerate. The company has strategically ventured into high-potential sectors such as railways, metros, solar energy, battery storage, and transmission infrastructure, with a goal to expand its non-road infrastructure portfolio to approximately 35% by FY27. This diversification is aimed at leveraging India's evolving infrastructure needs and securing high-potential projects in emerging areas.

Robust Order Book and Pipeline

As of September 2025, the total order book stood at INR13,933 crores, with roads and highways contributing 56% (INR9,163 crores), rails and metros 20% (INR2,720 crores), and renewables (BESS, Solar, T&D) making up 14%. The company has a strong bidding pipeline of INR1,35,000 crores for the year, including significant opportunities from NHAI (INR65,000 crores) and other ministries (INR70,000 crores), and aims to secure INR10,000-11,000 crores in new order inflows for FY26.

HAM Asset Monetization for Deleveraging

H.G. Infra executed a binding offer document for the monetization of 5 HAM projects (Raipur-Visakhapatnam AP1, OD5, OD6; Khammam-Devarapalle 1, 2) to Neo Infra Income Opportunities Fund for an enterprise value of INR3,584 crores. This transaction, involving the sale of 100% equity stake in these subsidiaries, is expected to strengthen the balance sheet, reduce leverage, and enhance financial flexibility, with funds earmarked for new HAM bids and other high-return infrastructure opportunities. The share purchase agreement for one project (OD6) has been executed, with the remaining four targeted for this quarter.

Financial Performance and Margin Commentary

For Q2 FY26, standalone revenue was INR1,154 crores with an EBITDA margin of 12.7% and PAT margin of 5.8%. Consolidated revenue was INR905 crores with an EBITDA margin of 22.8% and PAT margin of 5.7%. Profitability was impacted by a INR35 crores provision in Q2 (following INR40 crores in Q1) on the Ganga Expressway project due to a 'change in law' related to aggregate procurement, which management may pursue through arbitration. The company expects margins to normalize to 15-16% from Q3 FY26 onwards.

Debt and Working Capital Management

Standalone gross debt stood at INR1,634 crores, comprising working capital, NCDs, and term debt. The increase in debt during Q2 was attributed to advances to vendors (INR150 crores), mobilization advances (INR250 crores), and pending HAM bank disbursements (INR490 crores). Management anticipates a significant decrease in debt in Q3 and Q4 as HAM bank disbursements are received and working capital cycles tighten, supporting overall liquidity.

Progress in Renewables (Solar & BESS)

The company's solar projects (700MW DC, EPC value INR2,243 crores) are 94.1% complete, with 89% of debt funding sanctioned and 79% disbursed, and full commissioning expected within the timeline. In Battery Energy Storage Systems (BESS), H.G. Infra has secured 735MW/1,470MWh capacity, initiated procurement for key components, and expects INR150-250 crores in revenue this financial year, with an annual revenue target of INR225 crores upon full completion and commissioning of all BESS projects.

Key Project Updates

The INR4,800 crores Ganga Expressway project is 99% complete, with COD expected soon. The UER project has been completed and handed over. Several HAM projects, including Raipur-Visakhapatnam OD-5, OD-6, and AP-1, and Khammam-Devarapalle KD1, KD2, are nearing 100% completion with COD expected in Q3/Q4 FY26. Railway projects like DMRC metro (92% complete) and Bilaspur RVNL (75% complete) are also progressing well, despite some initial delays due to external factors like CONCOR execution and abnormal rains.

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