Highway Infrastructure Limited IPO: A Full Guide to its Public Listing

Highway Infrastructure Limited (HIL), an integrated infrastructure development company, is set to make its debut on the public markets with an Initial Public Offering (IPO). This public listing follows a long-standing track record in the infrastructure sector, with operations spanning tollway collection, engineering, procurement, and construction (EPC) projects, and a smaller presence in real estate development. This article provides a detailed overview of HIL's business model, recent financial performance, the specifics of its planned IPO, its position within the market, the competitive landscape it navigates, and its future outlook.

Table of Contents

1. Highway Infrastructure Limited at a Glance
2. The Road to IPO: Key Details and Regulatory Filings
3. Financial Performance: Navigating Topline and Bottomline
4. Peer Comparison of Accounting Ratios
5. Sources of Revenue and Geographic Concentration
6. Key Financial Ratios and Performance Metrics
7. Composition of Revenue
8. Market Landscape and Competitive Dynamics
9. Future Outlook and Investor Considerations
10. Conclusion: Charting Highway Infrastructure Limited's Public Future
11. FAQs

Highway Infrastructure Limited at a Glance: Business Model and Market Presence

Established in 1995, Highway Infrastructure Limited is a diversified infrastructure company with nearly three decades of experience. Headquartered in Indore, the company operates across three main business verticals:

• Tollway Collection: This is the company's largest revenue source, accounting for approximately 77% of its FY25 revenue. HIL manages toll systems on highways across 11 states and one Union Territory, leveraging technology such as Automatic Number Plate Recognition (ANPR) on high-traffic routes like the Delhi-Meerut Expressway to enhance efficiency.
• EPC Infrastructure: HIL's in-house capabilities allow it to execute a wide range of civil infrastructure projects, including roads, bridges, and irrigation-related construction. The company has a proven track record, with over 60 completed projects and many more currently under execution.
• Real Estate Development: This is the smallest of HIL's business segments, focusing on residential and commercial property development.

Highway Infrastructure Limited Key Details:

Wrap Up: HIL's business model is built on a diverse portfolio and an emphasis on technology to enhance operational efficiency. Its strong presence in the toll and EPC sectors, combined with a robust order book, provides a clear path for future growth.

The Road to IPO: Key Details and Regulatory Filings

Highway Infrastructure Limited is launching a book-building IPO to raise ₹130 crore. The IPO comprises a mix of a fresh issue and an Offer for Sale (OFS), allowing the company to raise capital for its working capital needs while also providing an exit opportunity for existing shareholders.

Highway Infrastructure Limited IPO Details:

The proceeds from the fresh issue are intended to meet the company's working capital requirements to ensure the smooth execution of ongoing and upcoming projects. The OFS component, though relatively smaller, provides liquidity to long-term investors.

Wrap Up: The IPO's structure highlights HIL's intention to raise capital to support its operational growth. The company's strategic decision to use the proceeds for working capital demonstrates a focused approach to business expansion.

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Financial Performance: Navigating Topline and Bottomline

Based on the provided financials, Highway Infrastructure Limited has demonstrated consistent growth in profit, despite a dip in revenue in Fiscal 2025. This indicates a focus on operational efficiency and cost management. The company’s net worth has also grown steadily, reflecting its strengthening financial position.

Highway Infrastructure Limited: Restated Consolidated Statement of Profit and Loss (in ₹ Million)

Wrap Up: HIL's financial performance shows a company with a strong foundation. The increase in profit despite the revenue drop in FY25 suggests that HIL has been successful in improving its operational efficiency. The consistent growth in net worth and EPS further bolsters its financial health as it heads for its public listing.

Peer Comparison of Accounting Ratios

The following table provides a peer comparison of accounting ratios for Highway Infrastructure Limited and its listed industry peers, based on the provided data.

Analysis of Peer Comparison

Based on the available data, here is a breakdown of how Highway Infrastructure Limited compares to its listed peers:

• Scale and Revenue: Highway Infrastructure Limited is a significantly smaller company in terms of total revenue compared to IRB Infrastructure Developers Limited and H.G. Infra Engineering Limited. It is larger than Udayshivakumar Infra Limited. This suggests that Highway Infrastructure Limited operates on a smaller scale within the industry.
• Earnings per Share (EPS): Highway Infrastructure Limited's EPS of ₹3.40 is positive, which is a better performance than Udayshivakumar Infra Limited, which has negative earnings. However, it is lower than the EPS of H.G. Infra Engineering Limited (₹75.04) and higher than IRB Infrastructure Developers Limited (₹1.12).
• Return on Net Worth (RoNW): Highway Infrastructure Limited's RoNW of 19.03% indicates a healthy return for its equity shareholders. This is higher than H.G. Infra Engineering Limited (17.13%) and Udayshivakumar Infra Limited's negative return (-4.28%). However, it is lower than IRB Infrastructure Developers Limited (32.69%), which has the highest RoNW among the peers listed.

Sources of Revenue and Geographic Concentration

A significant portion of HIL's revenue is derived from projects concentrated in specific parts of India. As of May 31, 2025, the company's ongoing projects are located in Madhya Pradesh, Maharashtra, Uttar Pradesh, and Haryana. The company's revenue is primarily generated from these key states, making its financial performance susceptible to any adverse developments within these regions.

Below is a tabular representation of HIL's state-wise revenue from operations for Fiscal 2025, Fiscal 2024, and Fiscal 2023:

Wrap Up: While HIL has a presence in multiple states, its revenue streams are not evenly distributed. The company's reliance on a few key states for the majority of its revenue presents a risk that investors should consider.

Key Financial Ratios and Performance Metrics

The table below presents a summary of key financial performance indicators for HIL over the last three fiscal years.

Analysis of Key Metrics:

• Profitability: HIL has shown a consistent increase in its PAT (Profit After Tax) over the three years, indicating an improving ability to generate profits. The PAT margin has also steadily risen from 3.02% in FY23 to 4.44% in FY25. This indicates a more efficient cost structure, which is a positive sign for investors. While the EBITDA margin saw a slight dip in FY25, it has generally remained in a healthy range.
• Capital Efficiency and Returns: The company's Return on Equity (ROE) and Return on Capital Employed (ROCE) metrics are strong, demonstrating its efficiency in utilizing both shareholder and overall capital. While both ROE and ROCE saw a decrease in FY25, they remain at healthy levels. A higher ROE (19.03%) compared to ROCE (16.56%) in FY25 suggests that the company is effectively leveraging its debt to boost returns for its shareholders.
• Leverage: The Debt-Equity Ratio has shown a downward trend, decreasing from 0.85 in FY23 to 0.61 in FY25. This indicates that HIL is reducing its reliance on borrowed funds and improving its financial stability, which is a positive signal for lenders and investors. An infrastructure company's Debt-Equity Ratio is typically considered healthy if it is below 2.0. HIL's ratio is well within this desirable range, indicating a prudent approach to financing.
• Growth and Operations: The company's Revenue and EBITDA have demonstrated positive compounded annual growth rates (CAGR) from FY23 to FY25. This is supported by the expansion in its toll operations and the number of states it operates in, though these figures have been variable year-on-year.

Wrap Up: HIL's key financial ratios point to a company that is financially prudent, operationally efficient, and capable of generating strong returns. The decreasing debt-equity ratio and rising profitability margins are particularly encouraging signs of a maturing business with a focus on sustainable financial health.

Composition of Revenue

The company's revenue is primarily driven by its Tollway Collection business, which has consistently been the largest contributor.

Wrap Up: While HIL has a presence in multiple states, its revenue streams are not evenly distributed. The company's reliance on a few key states and a single business vertical (Tollway Collection) for the majority of its revenue presents a risk that investors should consider.

Market Landscape and Competitive Dynamics

The Indian infrastructure sector, particularly road and highway development, is a high-growth market. The government's continued push for infrastructure development, including schemes like the Toll-Operate-Transfer (TOT) model and FASTag mandates, provides a favourable environment for companies like HIL.

Competitive Environment:

• Diverse Competitors: HIL operates in a market with numerous competitors, including both established infrastructure companies like G.R. Infraprojects and IRB Infrastructure, as well as smaller, regional players.
• Tender-Based Business: A significant portion of HIL's business, particularly in the EPC segment, is tender-based, which exposes the company to intense competition and potential margin pressures.
• Government Dependency: Given that a large portion of its revenue is derived from government bodies like the National Highways Authority of India (NHAI), HIL's business is susceptible to changes in government policies and project delays.

Wrap Up: HIL's strategic focus on both toll collection and EPC projects, combined with its technological advantages, positions it to capitalise on the growth of the Indian infrastructure sector. However, the company must navigate the challenges of a highly competitive, tender-based environment and significant reliance on government contracts.

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Future Outlook and Investor Considerations

HIL's future outlook is shaped by its strengths and its ability to manage the inherent risks of its business model.

Strategic Focus Areas:

• Order Book Execution: With a consolidated order book of over ₹666 crore as of May 2025, HIL has strong revenue visibility for the medium term. Its ability to execute these projects on time and within budget will be crucial.
• Technological Advancement: HIL's use of ANPR and other electronic toll collection systems gives it a competitive edge. Continued investment in technology can improve operational efficiency and potentially secure more contracts.
• Diversification: While toll collection is its primary revenue driver, HIL's efforts to grow its EPC and real estate segments could help mitigate risks associated with a single business vertical.

Risks and Challenges:

• Working Capital Intensity: The business is working capital intensive, and the company's ability to manage its cash flow will be a key factor for its financial health.
• Regulatory Risks: Changes in government regulations, especially those related to tolling and project awards, could impact HIL's business.
• Geographic Concentration: A significant portion of HIL's operations are concentrated in specific regions, making it vulnerable to adverse developments in those areas.

Wrap Up: HIL has a promising future, backed by a strong order book and a favourable market environment. However, investors should be mindful of the risks associated with a tender-based business model and a high dependency on government projects.

Watch this concise review by Jayesh Khatri, where he breaks down the fundamentals of Highway Infrastructure Ltd IPO, examining key financial metrics and subscription expectations from a retail investor’s lens.

Conclusion: Charting Highway Infrastructure Limited's Public Future

Highway Infrastructure Limited is entering the public market at a time of significant growth in India's infrastructure sector. With a strong foundation in both toll collection and EPC projects, a healthy order book, and a strategic focus on technology, HIL is well-positioned for long-term growth.

The company's IPO, structured to meet working capital needs, reflects a disciplined approach to capital raising. While it must navigate the competitive and regulatory challenges of the infrastructure space, HIL's proven execution capabilities and diversified business model suggest a resilient path forward. The IPO presents an opportunity for investors to participate in a key player in India's expanding infrastructure ecosystem.

FAQs

1. What is the Highway Infrastructure Limited IPO size?

The IPO aims to raise ₹130 crore, consisting of a fresh issue of ₹97.52 crore and an Offer for Sale of ₹32.48 crore.

2. What are the key business segments of Highway Infrastructure Limited?

The company's three main business verticals are tollway collection, EPC (Engineering, Procurement, and Construction) infrastructure, and real estate development.

3. What is the company's main source of revenue?

Tollway collection is HIL's largest revenue contributor, accounting for approximately 77% of its FY25 revenue.

4. What are some of the main risks for investors?

Key risks include high dependency on government contracts, intense competition in the tender-based business model, and the working capital-intensive nature of its operations.