Highway Infrastructure IPO Sees 27x Subscription on Day 1, Rides on Fastag-Led Growth Momentum

Highway Infrastructure Limited (HIL), incorporated in 1995, is an Indian infrastructure development and management company with a strong presence in tollway collection, engineering, procurement, and construction (EPC) projects, as well as real estate development. The company is primarily involved in the construction and maintenance of roads, highways, bridges, and residential projects.

The company is now launching its Initial Public Offering (IPO), aiming to raise Rs 130.00 crore through a book-building process. This includes a fresh issue of 1.39 crore equity shares aggregating to Rs 97.52 crore and an offer for sale (OFS) of 0.46 crore shares worth Rs 32.48 crore. The IPO opened for subscription on August 5, 2025, and will close on August 7, 2025. The allotment of shares is expected to be finalized on August 8, 2025, with a tentative listing date scheduled for August 12, 2025, on both the BSE and NSE.

The price band for the issue has been set at Rs 65 to Rs 70 per share, with a lot size of 211 shares. For retail investors, the minimum investment amount is Rs 13,715. For small non-institutional investors (sNII), the lot size is 14 lots (2,954 shares) requiring an investment of Rs 2,06,780, while for big non-institutional investors (bNII), the investment stands at 68 lots (14,348 shares), amounting to Rs 10,04,360.

Pantomath Capital Advisors Pvt Ltd is acting as the book-running lead manager to the issue, and Bigshare Services Pvt Ltd is appointed as the registrar.

See details below:

Use of Proceeds and Promoter Details:

The net proceeds from the Highway Infrastructure IPO are proposed to be utilised primarily for funding the working capital requirements of the company, with an allocation of Rs 65.00 crore towards this objective. The remaining funds will be directed towards general corporate purposes, enabling the company to support its ongoing operations and strengthen its overall financial position.

In terms of ownership, the promoters of Highway Infrastructure Limited—Arun Kumar Jain, Anoop Agrawal, and Riddharth Jain—collectively held a 94.95 per cent stake in the company prior to the issue. Post-IPO, the promoter and promoter group shareholding is expected to reduce to 70 per cent, while the public shareholding will increase from 5 per cent to 30 per cent. This change in shareholding structure marks a significant step towards broader investor participation and enhanced public ownership.

Company Profile:

Highway Infrastructure Limited (HIL) is a diversified infrastructure company with operations across tollway collection, EPC (Engineering, Procurement, and Construction) projects, and real estate. Toll operations are the primary revenue driver, followed by EPC services.

HIL’s EPC segment covers roads, bridges, irrigation structures, and buildings for both government and private clients. As of May 31, 2025, its consolidated order book stood at Rs 666.3 crore—Rs 59.53 crore from tollway contracts and Rs 606.78 crore from EPC projects.

A tech-driven player, HIL is among the few Indian toll operators using Automatic Number Plate Recognition (ANPR) on high-traffic corridors like the Delhi–Meerut Expressway. It operates toll plazas across 11 states and one Union Territory, utilizing Electronic Toll Collection (ETC) systems with RFID tags and digital payments for faster, contactless transactions.

The company relies on a mix of fund-based and non-fund-based banking facilities for project execution. Non-fund-based instruments like bank guarantees require cash margins in the form of fixed deposits, increasing working capital needs as project volumes grow.

Industry Outlook:

India’s toll operations sector is on a strong growth trajectory, supported by rising traffic volumes, infrastructure expansion, and digital tolling systems. The toll management market is expected to grow at a 21 per cent CAGR from FY 2021 to FY 2029, reaching Rs 33 billion by FY 2024, a 14 per cent YoY increase from FY 2023. Around 5,100 km of new tollable roads by FY 2025 could add Rs 4,200 crore in revenue across FY 2025–26. Government programs like Vision 2047 and Bharatmala Pariyojana offer significant opportunities for toll operators like HIL.

In the EPC segment, initiatives like the National Infrastructure Pipeline (NIP) are driving massive capex in roads, energy, railways, and urban development. These sectors are expected to absorb 70 per cent of total infrastructure spending between FY 2020 and FY 2025.

While real estate is currently a smaller vertical for HIL, it is gaining traction, especially in commercial development. The commercial real estate market is projected to grow at a 6.1 per cent CAGR between FY 2025 and FY 2029, expanding from Rs 4,045 crore to Rs 5,124 crore. HIL is gradually expanding its portfolio in residential and commercial property development, aiming to build a complementary long-term revenue stream.

Financials:

(Source – Company’s RHP)

Balance Sheet Snapshot

(Source – Company’s RHP)

Key Metrics

(Source – Company’s RHP)

Key Ratios

(Source – Company’s RHP)

Listed Peer Comparison

Strengths

• Proven Execution Track Record: Nearly 30 years of experience in tollway collection and EPC infrastructure projects, including ANPR-based tolling on the Delhi–Meerut Expressway.
• Experienced Leadership: Led by seasoned professionals with expertise in infrastructure operations, finance, and bidding.
• Diversified Order Book: Consolidated order book of Rs 666.3 crore as of May 31, 2025, with strong EPC and toll segments providing revenue visibility.
• Consistent Financial Growth:
  • Revenue CAGR of 4.36 per cent from FY23 to FY25.
  • PAT CAGR of 27.4 per cent over the same period.
  • Improved debt-equity ratio (0.85x to 0.61x).
  • Healthy RoNW (19.03 per cent) and ROCE (16.56 per cent) in FY25.
• Asset Ownership: In-house ownership of key EPC machinery enables cost control and additional leasing income.

Weaknesses

• Heavy Dependence on Government Contracts: Significant reliance on public sector clients like NHAI; contract disruptions could impact revenues.
• Short-Term Toll Contracts: Most toll contracts are limited to one-year tenures, causing revenue uncertainty.
• High Capital Requirements: Capital-intensive operations with increasing working capital needs.
• Geographical Concentration: Projects concentrated in select states may limit nationwide expansion potential.
• Negative Operating Cash Flows: Reported Rs 4.5 crore negative cash flow in FY25, posing liquidity challenges.
• Contingent Liabilities: Rs 79.6 crore in contingent liabilities not reflected in financials could pose future risks.
• Restrictive Loan Covenants: Borrowings include conditions that may restrict financial flexibility.
• Subcontractor Dependence: Execution risks due to reliance on third-party subcontractors.
• Falling Bid Success Rate: Decline from 39.56 per cent in FY23 to 17.77 per cent in FY25, affecting growth prospects.

Valuation and Outlook

Highway Infrastructure Ltd. (HIL) brings nearly three decades of experience in tollway operations and EPC execution across multiple Indian states, supported by a diversified portfolio spanning toll collection, infrastructure, and real estate. As of May 31, 2025, the company holds a robust order book of Rs 666.3 crore—1.34x its FY25 revenue—offering strong visibility over the medium term. The company's increasing adoption of digitized tolling solutions such as ANPR technology and a balanced revenue mix lend it an operational edge in India’s expanding infrastructure landscape.

At the upper price band of Rs 70, the IPO values the company at Rs 502 crore, translating to a P/E of 22.5x, P/B of 2.33x, and EV/EBITDA of 17.6x—suggesting fair valuation. While HIL's return ratios are superior to some larger peers like IRB, the valuation appears premium relative to more attractively priced players such as H.G. Infra. The planned deployment of Rs 65 crore from fresh proceeds towards working capital, alongside macro tailwinds in infrastructure and road development, supports its growth plans. However, the recent topline contraction in FY25 and high dependence on EPC revenues suggest the need for disciplined execution and scaling of toll operations to ensure sustained performance.

Recommendation

Given the long-term growth visibility, digitization-led operational efficiency, and government’s continued focus on infrastructure buildout, we recommend a “Subscribe – Long Term” stance for investors with a multi-year horizon. A measured allocation is advisable, considering the fair valuation and execution sensitivities.