H.G. Infra Engineering Limited — Q3 FY25 earnings call

Call held 7 Feb 2025

Management summary

H.G. Infra Engineering Limited reported a strong Q3 FY25 with standalone revenue growth of 12% and EBITDA margin expansion to 16.6%. The company's order book stands at INR 15,080 crores, providing good visibility. While debt increased due to solar project funding delays, management expects normalization by March '25. Execution challenges persist in some projects due to land and regulatory issues, and the pace of new government awards has been slow.

Highlights

  • Standalone Q3 FY25 Revenue grew 12% YoY to INR 1,509 crores from INR 1,346 crores.

  • Standalone Q3 FY25 EBITDA margin improved to 16.6% from 15.9% YoY.

  • Consolidated Q3 FY25 EBITDA margin significantly increased to 22.7% from 7.5% YoY.

  • Order book of INR 15,080 crores provides strong revenue visibility, with 33% HAM and 67% EPC.

  • Successful monetization of 3 HAM projects, with INR 54 crores received in Oct '24, and Rewari-Bypass monetization expected in Feb '25 for INR 133 crores.

Concerns

  • Standalone gross debt increased to INR 1,329 crores due to delays in SPV approvals and disbursements for solar projects.

  • Execution delays in several projects (Neelmangala-Tumkur, DMRC, Kanpur Railway Station) due to land issues, design changes, and regulatory approvals.

  • Slowdown in government ordering and project awards, with management acknowledging a delay of over 1.5 years in new awards.

Key financials

2 periods

Q3 FY25

  • Standalone Revenue
    ₹1,509 Cr
    YoY +12%
  • Standalone EBITDA
    ₹250 Cr
    YoY +16.8%
  • Standalone EBITDA Margin
    16.6%
  • Standalone PAT
    ₹137 Cr
  • Standalone PAT Margin
    9.1%
  • Consolidated Revenue
    ₹1,265 Cr
  • Consolidated EBITDA
    ₹287 Cr
    YoY +25.7%
  • Consolidated EBITDA Margin
    22.7%
  • Consolidated PAT
    ₹115 Cr
    YoY +12.7%
  • Consolidated PAT Margin
    9.1%

9M FY25

  • Standalone Revenue
    ₹4,079 Cr
  • Standalone EBITDA
    ₹668 Cr
    YoY +19.8%
  • Standalone EBITDA Margin
    16.4%
  • Standalone PAT
    ₹365 Cr
  • Standalone PAT Margin
    8.9%
  • Consolidated Revenue
    ₹3,695 Cr
    YoY +0.7%
  • Consolidated EBITDA
    ₹819 Cr
    YoY +12.3%
  • Consolidated EBITDA Margin
    22.2%
  • Consolidated PAT
    ₹358 Cr
    YoY +2.6%
  • Consolidated PAT Margin
    9.7%

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

₹15,080 Cr

as of 2024-12-31 quantified

Composition

Mix 3 segments
  • Roadways & Highways 75%
  • Railways & Metro 15%
  • Solar 10%

Share of order book by segment

Pipeline

deal pipeline tcv

Highways pipeline > INR 50,000 crores, Railway approx INR 18,000 crores, Solar/Batteries approx INR 8,000 crores

Cancellations & deferrals

  • descoped: Neelmangala-Tumkur project stalled for 6 months due to land issue, settlement agreement executed in Dec '24, with project cost descoped from INR 844 crores to INR 650 crores.
  • deferred: DMRC project delayed due to land issues.
  • deferred: Kalimandir-Jamshedpur project progress delayed due to design changes from authorities.
  • deferred: Dhule-Nardana, Gaya-Son Nagar, and Karanjgaon projects (Aurangabad project) slow progress due to design/drawing revision and land issues.
Management believes the order book provides strong visibility and is well-diversified across segments and contract types, despite some project-specific delays.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹50 Cr
    So we have done around INR92 crores of the capex during the year and just I think a few crores, I think INR5 crores to INR10 crores in the quarter 4. And from the next year, we don't foresee any big number to be there. It just a INR40 crores to INR50 crores would be good for the next year.
  • Debt Gross ₹1,329 Cr
    On a stand-alone basis, our gross debt stands at INR1,329 crores. This comprises of INR566 crores in working capital and other INR763 crores of term loan and maturities.
  • M&A 3 HAM projects Divestment · Closed · Consideration ₹[object Object] (cash)

    Asset monetization

    INR 54 crores received in October '24, post approval of NHAI related to GST change in law claim.

    we have successfully monetized our 3 projects wherein INR315 crores were received in FY '23-124 and remaining INR54 crores received in October '24, that is post approval of NHAI related to GST change in law claim.
  • M&A Rewari-Bypass (4th HAM project) Divestment · Pending regulatory · Consideration ₹[object Object] (cash)

    Asset monetization

    INR 133 crores expected to be received from Rewari-Bypass proceeds in this quarter, against an equity investment of INR 75.7 crores.

    So there is around INR133 crores expected to be received from Rewari-Bypass proceeds in this quarter where we have invested equity of INR75.7 crores.
  • M&A 5 HAM assets Divestment · Announced

    Asset monetization

    Discussions on monetization are set to begin soon and expected to conclude in the upcoming financial year.

    Discussions on the monetization of these 5 assets, which are nearing completion are set to begin soon and we anticipate that the entire monetization process will be concluded in the upcoming financial year.
  • Liquidity Cash ₹160 Cr Standalone cash is INR 160 crores, consolidated cash is INR 180 crores.
    This is INR160 crores, not INR200 crores. ... Consol is INR180 crores.

Guidance & targets

Revenue

  • Revenue Growth Revenue · upcoming quarters · High confidence 17-18%
    We are confident to maintain an EBITDA margin of 15% to 16% and achieve revenue growth of 17% to 18% in the upcoming quarters.

    — Harendra Singh

  • Revenue Revenue · FY26 · High confidence INR 7,000 crores
    For the next year, we are expecting about INR7,000-odd crores of execution and with order inflow of around INR10,000 crores.

    — Harendra Singh

Margin

  • EBITDA Margin Margin · upcoming quarters · High confidence 15-16%
    We are confident to maintain an EBITDA margin of 15% to 16% and achieve revenue growth of 17% to 18% in the upcoming quarters.

    — Harendra Singh

  • Margins Margin · FY26 · High confidence 15-16%
    Margins will always be around 15% to 16% that range.

    — Harendra Singh

Order Inflow

  • Order Inflow Order Inflow · FY25 · High confidence INR 11,000-12,000 crores
    We have targeted an order inflow of INR11,000 crores to INR12,000 crores of FY '25.

    — Harendra Singh

  • Order Inflow Order Inflow · FY26 · High confidence INR 10,000 crores
    For the next year, we are expecting about INR7,000-odd crores of execution and with order inflow of around INR10,000 crores.

    — Harendra Singh

Debt

  • Standalone Gross Debt Debt · March '25 · High confidence INR 600-700 crores

    From INR 1,329 crores today

    But then again, it will be coming back to INR600 crores to INR700 crores only. ... By March '25? Yes.

    — Harendra Singh

HAM Equity Infusion

  • Equity Infusion for HAM projects HAM Equity Infusion · 3 months of FY25 · High confidence INR 123 crores
    Remaining INR123 crores is expected to be infused in 3 months of FY '25

    — Harendra Singh

  • Equity Infusion for HAM projects HAM Equity Infusion · FY26 · High confidence INR 300 crores
    and balance INR300-odd crores to be infused in FY '26

    — Harendra Singh

  • Equity Infusion for HAM projects HAM Equity Infusion · FY27 · High confidence INR 300 crores
    and around INR300 crores in FY '27.

    — Harendra Singh

Solar Project

  • EPC Margin for Solar Projects Solar Project · High confidence 18%
    As far as the solar project where we have already initially estimated that we will be having roughly around 18% EPC margin

    — Harendra Singh

  • Equity IRR for Solar Projects Solar Project · High confidence 14%+
    and around 14% plus of equity IRR, which we have initially estimated for, that remains the same.

    — Harendra Singh

BESS Project

  • Equity IRR for BESS Projects BESS Project · High confidence 14-15%
    we will be having the cash flow in this where around 14%-15% of the equity IRR is maintained.

    — Harendra Singh

  • EPC Margin for BESS Projects (HGIEL share) BESS Project · High confidence 10-12%
    the order which is coming to H.G. will have around 10% to 12%, even more than 12% to 13% of the EPC margins.

    — Harendra Singh

Neelmangala-Tumkur Project

  • Revenue from Neelmangala-Tumkur Neelmangala-Tumkur Project · FY26 · High confidence INR 200 crores
    FY '26, it could be roughly around INR200 crores

    — Harendra Singh

  • Completion of Neelmangala-Tumkur Neelmangala-Tumkur Project · FY27 · High confidence balance all, everything will be completed
    and FY '27, balance all, everything will be completed.

    — Harendra Singh

What to watch in Q4 FY25

Standalone Gross Debt Normalization

March '25
Current INR 1,329 crores
Target INR 600-700 crores

Why it matters

Debt reduction is crucial for improving financial health and reducing interest burden, especially after the temporary increase.

But then again, it will be coming back to INR600 crores to INR700 crores only. ... By March '25? Yes.

Risks & concerns

  • Land acquisition and regulatory approval delays

    high

    Several projects (Neelmangala-Tumkur, DMRC, MSRDC projects, Jharkhand HAM) face delays due to land issues and pending approvals, impacting execution pace.

    Management acknowledged

  • Slowdown in government project awards

    high

    Management noted a slowdown in new project awards for over 1.5 years, though they expect a pick-up after land and utility clearances.

    Management acknowledged

  • Design changes from authorities

    medium

    Kalimandir-Jamshedpur and other projects experienced delays due to design and drawing revisions from authorities.

    Management acknowledged

  • SPV approval and disbursement delays for solar projects

    medium

    Delays in SPV approvals and disbursements for solar projects led to a temporary increase in standalone debt, though expected to normalize.

    Management acknowledged

  • Labor issues and election impact

    low

    Delhi projects faced labor issues and general execution was impacted by elections, but conditions are normalizing.

    Management acknowledged

Q&A highlights

7 direct
Balance Sheet Data Points Direct
Inventory is INR405 crores, and the debtor, that is trade receivables is INR1,545 crores. ... And trade payables is INR1,075 crores. ... retention money is around INR122 crores and this is contract asset which is unbilled revenue, is INR1,297 crores. ... This is INR305 crores. ... Yes, INR1,329 crores. ... This is INR160 crores, not INR200 crores. ... Consol is INR180 crores.

Provides crucial working capital and debt figures for the quarter, which are key for construction companies.

Asked by Shravan Shah

BESS Project Investment and Cash Flow Direct
the total solar project in which initial phase of land procurement to other activities where the ordering is to be done for securing the solar modules and other balance of land. So, that has involved a lot of cash where the sanction, which took time because there was some SVP approval which was delayed by 2 to 3 months. ... So, for that time gap arrangement, it went up to a very high number. But again, it will be coming back to the, again, INR600 crores-INR700 crores, which already bid earlier we were accepted for.

Clarifies the capital outlay and funding challenges for new BESS projects, explaining the temporary increase in debt.

Asked by Deepak Purswani

Order Book Visibility and MSRDC Projects Partial
if your specific point is for the year, which we are estimating at about, say, getting INR6,100 crores of around revenue in this year with this quarter is only balance. So that is not considering any MSRDC project. ... So, in that scenario, which we are expecting around 15% to 17% growth year-on-year for FY '26. So out of this, we only considered only a very small portion of MSRDC, that is roughly around INR250 crores.

Addresses concerns about the execution and revenue contribution from MSRDC projects, which have faced delays, and clarifies their limited impact on near-term revenue targets.

Asked by Yash Dedhia

Government Ordering Slowdown and Future Outlook Direct
Definitely, it has been delayed for a long. I think it's more than 1.5 years where nothing has been picked up as far as awarding is concerned or ordering is concerned. But I believe there are many projects which the government has also got the Cabinet approval where the certain DPR because now the focus is very clear that because of the time delay, there has been some prolongation costs and so they are now focusing more on the first securing the land, having all utilities alignment clear, then they will be looking into awarding and this has been a bit delayed.

Acknowledges the significant slowdown in government project awards, a key risk for the sector, but expresses optimism for future awards after land and utility clearances.

Asked by Yash Dedhia

New Vertical Entry (Transmission) Direct
So, since we have entered into the solar and renewable and battery, so we have seen the similar, let's say the solar is the power generation and the power generation and the evacuation where the step-up is being done because the substation and switchyard and other balance of all items. ... So, in that scenario, we have seen that the transmission business where there are TB/CB kind of business, which again gives a similar of execution where the certain part is EPC, where the foundation work is to be done is civil construction, which is around 30%-35%.

Explains the rationale and synergy for entering the transmission sector, leveraging existing EPC capabilities from solar and civil construction.

Asked by Vishal Periwal

Railway Project L1 Bid Profitability Direct
If you can just compare the L1 L2 gap is hardly 2.5-3%. So that's not L3 followed by L3 also. So there's not a big gap. Number one is because of this project is a kind of a unique combination where the highway constitutes the right, not highway, it's a particularly elevated road to be developed. This is around INR800 crores and INR700 crores is just air concourse which is a purely fabricated item majorly where the other part is having the proficiency because they are having near to Hyderabad, this fabrication unit they have set up.

Clarifies the profitability and unique nature of a recently won railway project, highlighting the specialized civil and fabrication components that ensure margins.

Asked by Deepak Purswani

River Linking Project Pipeline Direct
See in that context, one thing is the Eastern Rajasthan. This is the 3 rivers to be linked in which 2 states are benefited, is MP and one is Rajasthan. Rajasthan being the bigger, larger beneficiaries of that and also in Yamuna River is going to the feeder is going to be developed. So, there is around, in Delhi, around, say, around INR1,25,000 crores of project, where the central government has given us go ahead for giving the 90% of the funding.

Highlights the significant opportunity in the water sector, specifically river linking projects, with substantial government funding and potential for HAM-based projects.

Asked by Deepak Purswani

Equity Requirement for Battery Projects Direct
This is around INR450-plus crores in the next 2 years, correct.

Provides clarity on the equity capital required for the new battery energy storage system (BESS) projects over the next two years.

Asked by Deepak Purswani

2 min read 6 chapters

Detailed narrative

Q3 & 9M FY25 Financial Performance Overview

H.G. Infra Engineering reported a standalone revenue of INR 1,509 crores for Q3 FY25, marking a 12% YoY growth. Standalone EBITDA for the quarter stood at INR 250 crores, with the margin expanding to 16.6% from 15.9% in Q3 FY24. For the nine months ended FY25, standalone revenue reached INR 4,079 crores with an EBITDA margin of 16.4%. Consolidated figures also showed growth, with Q3 FY25 EBITDA margin at 22.7% and 9M FY25 EBITDA margin at 22.2%.

Robust Order Book and Inflow

As of 9 months FY25, the company's order book stood at a healthy INR 15,080 crores, providing strong revenue visibility. This order book is diversified, with roadways and highways contributing 75% (INR 11,235 crores), railways and metro 15% (INR 2,289 crores), and solar 10% (INR 1,556 crores). The contract mix is 33% HAM and 67% EPC. The company has secured approximately INR 8,200 crores in new orders till date in FY25, including a new railway station project.

Strategic Expansion into Renewables and New Segments

H.G. Infra is strategically expanding into the rapidly growing solar and battery energy storage system (BESS) sectors. The company has secured 183 solar power plants under the KUSUM-C scheme, totaling 700 MW DC capacity, with an estimated EPC cost of INR 2,243 crores. New BESS projects (NTPC and GUVNL) totaling 435 MW / 870 MWh have been awarded, with HGIEL's EPC share expected to yield 10-12% margins and equity IRR of 14-15%.

Debt Management and Asset Monetization

Standalone gross debt increased to INR 1,329 crores, primarily due to delays in SPV approvals and disbursements for solar projects, necessitating temporary bridge funding. Management expects this debt to normalize to INR 600-700 crores by March '25. The company has successfully monetized 3 HAM projects, receiving INR 54 crores in October '24. Monetization of the Rewari-Bypass HAM project is expected to yield INR 133 crores in February '25, and discussions for monetizing 5 additional HAM assets are set to begin soon.

Execution Challenges and Government Ordering Slowdown

Several projects, including Neelmangala-Tumkur, DMRC, and Kalimandir-Jamshedpur, have faced execution delays due to land acquisition issues, design changes, and regulatory approvals. The Neelmangala-Tumkur project's cost was descoped by INR 194 crores due to settlement agreements. Management acknowledged a general slowdown in government project awards over the past 1.5 years but anticipates a pick-up as land and utility clearances are prioritized, especially in new segments like transmission and water infrastructure.

Future Outlook and Capital Expenditure

The company aims for 17-18% revenue growth and to maintain an EBITDA margin of 15-16% in the upcoming quarters. For FY26, it targets INR 10,000 crores in order inflow and INR 7,000 crores in revenue, with similar margins. Capex for 9M FY25 was INR 92 crores, with an additional INR 5-10 crores planned for Q4 FY25. For FY26, capex is projected to be minimal at INR 40-50 crores, indicating a focus on asset-light EPC operations.

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