H.G. Infra Engineering Q4 FY26 earnings call

H.G. Infra Engineering Limited reported a challenging Q4 FY26, with standalone revenue at INR 1,354 crores and PAT margin at 7.35%, a significant decline from 10.76% in Q4 FY25. Consolidated figures also showed a PAT margin of 5.93%. Management attributed this underperformance to geopolitical uncertainties, commodity price inflation, and project delays, which led to higher input costs and margin compression. The scope of one BESS project was also technically moved to an SPV, impacting reported revenue.

The company's new order inflows for FY26 were only INR 1,300 crores, significantly below the initial target of INR 10,000 crores, primarily due to muted bidding and project awarding activity by NHAI. However, H.G. Infra has seen a strong start to FY27, securing approximately INR 5,500 crores of new orders in the first two months. The total order book stood at INR 10,147 crores as of Q4 FY26, with a bid pipeline of over INR 100,000 crores in roads and railways for future opportunities.

H.G. Infra is actively expanding its presence beyond traditional roads and railways into high-growth sectors such as solar energy, Battery Energy Storage Systems (BESS), and power transmission. The company recently secured two transmission projects in Uttar Pradesh and Jharkhand with a combined EPC value of INR 1,200 crores, expected to contribute INR 160 crores annually to the top line. BESS projects, with an aggregate capacity of 735 MW, are progressing with procurement activities underway, and are expected to generate INR 500-550 crores in yearly top line once commissioned.

The company's consolidated net debt to equity ratio increased from 1.3 to 1.4 from FY25 to FY26, mainly due to delays in HAM project monetization. Management expects to receive approximately INR 1,000 crores from the monetization of 5 SPA-executed HAM projects in H1 FY27. This, combined with the re-sanctioning of INR 350 crores of solar project debt, is projected to reduce standalone debt to INR 800-1,000 crores and consolidated net debt to equity below 1 by the end of FY27.

For FY27, H.G. Infra is targeting an order inflow of INR 11,000-12,000 crores, with a focus on 70% from roads/railways and 30% from new verticals. The company aims for a turnover of INR 6,500-7,000 crores and an average margin of approximately 14% for the year. Execution is expected to be more aggressive in the latter half of FY27, driven by big-ticket projects like the INR 3,940 crores Pune-Shirur road project, whose appointed date is anticipated in October.

The company reported a debtor balance of INR 1,560 crores and unbilled contract assets of INR 1,857 crores. The high unbilled amount is attributed to projects nearing COD, where operational claims and final bills are yet to be realized. Management expects to receive around INR 500 crores from these contract assets in Q2/Q3 FY27. Key projects like Ganga Expressway and UER are completed, while others like Jamshedpur elevated project (52.36%) and Nelamangala-Tumkur (62%) are progressing steadily.