Highway Infrastructure IPO: Check IPO Date, Lot Size, Price & Details

Introduction:

Highway Infrastructure Limited (HIL) is a road infrastructure development company incorporated in 2002, operating primarily under the Hybrid Annuity Model (HAM) and Engineering, Procurement and Construction (EPC) modes. The company is a part of the M. G. Contractors Group, with a core focus on execution of road and highway projects awarded by government authorities like NHAI and MoRTH.

As of March 31, 2024, the company has:

• Executed 31 projects, with a total contract value of ₹6,104.43 crore.
• A strong order book of ₹6,132.54 crore, which includes 9 ongoing HAM projects, 2 EPC projects, and 3 newly awarded HAM projects.
• A total order book to revenue from operations ratio of 3.20x for Fiscal 2024, indicating healthy revenue visibility.

HIL’s operational strength lies in:

• Backward integration with its in-house manufacturing of construction materials like bitumen mix and pre-cast materials.
• Ownership of modern construction equipment worth ₹300 crore as of FY24.
• A reputation for timely execution, with several projects completed ahead of schedule.

The company had 1,011 employees and operated across several Indian states, with presence in challenging geographies like Ladakh.

IPO Details:

Objectives of Issue:

• Funding Working Capital Requirements of the Company
• General corporate purposes

Key Strengths:

• Established Track Record with Timely Project Execution

Highway Infrastructure Limited has executed over 31 infrastructure projects across India, including several in geographically and climatically challenging areas like Ladakh. The company has a reputation for ahead-of-schedule project completions, as acknowledged by awarding authorities. For example, the Barhi-Hazaribagh project was completed nearly 8 months ahead of schedule.

This timely delivery has earned the company:

• Early completion bonuses (₹45.24 crore received from FY22 to FY24).
• A strong reputation with key government clients like NHAI and MoRTH.

• Robust Order Book with High Revenue Visibility

As of March 31, 2024, the company’s order book stands at ₹6,132.54 crore, which is 3.20x its FY24 revenue from operations. The composition is as follows:

• HAM Projects (Ongoing): ₹5,207.38 crore (84.90%)
• EPC Projects: ₹350.48 crore (5.71%)
• Recently Awarded HAM Projects (Yet to be signed): ₹574.68 crore (9.37%)

This diversified portfolio of 11 active projects across HAM and EPC models ensures:

• Strong revenue pipeline over the next 2–3 years
• Enhanced predictability of cash flows
• Better operational planning and resource utilization

The company’s ability to win and mobilize on new projects at regular intervals demonstrates its execution readiness and scalability.

• In-House Operational Capabilities with Owned Equipment

HIL has adopted a vertically integrated operational model, reducing third-party dependency and enhancing execution control. As of March 31, 2024, the company owns:

• Construction equipment worth ₹300 crore
• Bitumen mix plants, WMM (Wet Mix Macadam) plants, and precast fabrication facilities
• In-house laboratories for quality control across all active project sites

This backward integration:

• Lowers project cost and improves margins
• Enables adherence to quality and timelines
• Supports deployment across multiple projects simultaneously

Such operational self-reliance is a key competitive edge in the cost-sensitive and schedule-critical infrastructure segment.

Key Risks

• Revenue Concentration from Government Clients

The company’s entire project portfolio is dependent on government agencies, mainly the National Highways Authority of India (NHAI) and Ministry of Road Transport and Highways (MoRTH). Any delay in budgetary allocations, policy changes, or slowdown in project tendering could significantly affect order inflow and execution timelines.

While working with government entities ensures payment security, it exposes HIL to the risk of delayed certifications and receivables, especially under the annuity model.

• Geographical and Project Execution Risk

HIL’s projects are spread across a few select states, including Ladakh, Rajasthan, Gujarat, and Uttar Pradesh. As of FY24:

• Significant exposure exists in Ladakh, where execution is often season-bound due to severe winters
• Any localized disruptions — political, environmental, or administrative — can affect project progress and profitability

Additionally, some projects have site-specific challenges like delayed land handover or clearance issues, which could result in time and cost overruns.

• High Dependence on HAM Projects

As of March 31, 2024, 84.90% of the order book value is attributed to Hybrid Annuity Model (HAM) projects. Though HAM offers predictable annuity-based cash flows post-completion, it also requires the company to fund 40% of project cost upfront through a combination of debt and equity.

Risks include:

• Delays in financial closure
• Project execution hurdles before annuity receipts begin
• Significant capital deployment over long periods without revenue recognition

This model also carries exposure to interest rate fluctuations, especially during the construction phase.

Financial Snapshot:

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