Highway Infrastructure (HIL), promoted by Arun K Jain, Anoop Agarwal and Riddharth Jain, is an infrastructure development and management company engaged in the business of toll-way collection, EPC Infra and real estate businesses.

Tollway collection projects business involves operation and management of tollway collection systems on highway projects of NHAI or other road development authorities. The company has operated tolls on some of the known inter-state and intra-state expressways across 11 states and one Union Territory. As on May 31, 2025, it completed 27 toll collection projects and are currently operating 04 tollway collection projects. Such projects are procured by way of a competitive bidding process. The tollway collection contracts are typically up to 12 months which may be extended by few months by the highway authority. The tollway collection contract is awarded based on a tender based competitive bidding process.

The Company employs updated Electronic Tollway Collection (ETC) systems, which leverage Radio Frequency Identification (RFID) tags and digital payment platforms to facilitate seamless and contactless toll payments. This model not only reduces congestion at toll plazas but also enhances operational efficiency by reducing transaction times and errors, thereby resulting in overall better management. HIL is one of the few toll operators who have managed tollway collection based on ANPR technology on Delhi-Meerut Expressway.

The EPC Infra business of the company comprises executing construction development projects of different types like roads, bridges, tanks, irrigation related construction and civil buildings etc., for customers. It is currently executing projects across Indore, Bhopal, Dhar, Ratlam and Khandwa in Madhya Pradesh, India. It has developed in-house resources to deliver a project from conceptualization to completion. As on May 31, 2025, the EPC infra business had 66 completed projects, four projects whose completion certificate is pending, and 24 projects are under execution.

The EPC infra business comprises executing construction development projects of different types like roads, bridges, tanks, irrigation related construction and civil buildings. The company undertakes projects under government schemes such as Pradhan Mantri Awas Yojna (PMAY), Pradhan Mantri Gram Sadak Yojna (PMGSY) and Jal Jeevan Mission as well as projects from public sector and private sector customers. Some of the private sector customers are Shubham City Homes, Shubham Builders, Shubham Energy, and Adroit Associates Pvt Ltd.

The real estate business comprises development of residential, commercial and integrated projects. It has so far undertaken two realty projects in Indore (Madhya Pradesh) i.e. Karuna Sagar (residential building with 822 flats at Kanadia Road, Indore) and New York City (a gated colony at Morod, Indore).

The company is developing three realty projects called (i) 'Beverly Plaza', which is an integrated development situated in Tillore-Khurd part of Indore, Madhya Pradesh, India; (iv) Highway Greens, which is for development of residential housing plots situated in Kanadia, Indore, Madhya Pradesh, India and (iii) New York City Phase-4, which is for development of residential building situated in Nihalpur Mundi, Indore, Madhya Pradesh, India.

The company is also considering developing projects for other sectors like hospitality, commercial centres, etc. Further, as part of its realty business, it has acquired various parcels of land at various points of time, which it intends to keep for business purpose including for future development.

Out of the consolidated revenue from operations of Fiscal 2025, the contribution of tollway collection business was 77.14%, the EPC infra business and real estate development constituted 77.14%, 21.28% and 1.58%, respectively.

Moreover, revenue of the EPC Infra business comprised about 67.85% and 74.39% from projects awarded by various central or state governments or local authorities in FY25 and FY24, respectively.

The consolidated order book of the company as on May 31, 2025, was Rs 666.307 crore, comprising Rs 59.53 crore in tollway collection business and Rs 606.777 crore in the EPC infra business. As of May 31, 2025, ongoing projects of the company are spread across Madhya Pradesh, Maharashtra, Uttar Pradesh and Haryana.

While the company's business spans facets of infrastructure development and management, tollway collection stands out as a significant mix of its business, driving its revenues and financial performance followed by EPC infra business.

The issue, objects of the offer

The offer consists of the fresh issue of equity shares aggregating upto Rs 97.52 crore and offer for sale of equity shares numbering 4640000 numbers. The entire portion of offer for sale is made by members of promoters, i.e., 2320000 shares each by Arun Kumar Jain and Anoop Agarwal.

Of the net proceeds from the fresh issue, the company proposes to utilise Rs 65 crore towards funding. The working capital requirements of the company and the balance towards general corporate purposes.

Strengths

Has close to 30 years of experience in running the tollway collection business and executing EPC infra projects over multiples states in India.

The order book translating into 1.34 times of the FY25 revenue provides strong revenue visibility.

A significant diversified revenue base and portfolio across toll collection projects, EPC and real estate.

Weaknesses

Growth depends on the ability of the company to win orders in competitive bidding process and any slowdown or delay in tendering, awarding of contracts by the relevant project authorities severely impact the business of the company. Further slowdown in construction activities or reduction in infrastructure projects in region/areas where the company currently operates may adversely affect the business of the company.

Promoters and certain of its KMP have interest in entities are engaged in business similar as that of the company leading to conflict of interest.

Has in the past entered related party transactions and may continue to do so in the future.

Had negative cash flow during certain fiscals. Sustained negative cash flow could adversely impact its financials.

There may be delays in implementation and completion within stipulated time in relation to its ongoing project, forthcoming projects and any future projects and may also undergo cost overruns in relation to its projects, which may have an adverse effect.

Strong competition in toll collection projects as there are 134 pre-qualified entities eligible to bid for NHAI tollway collection projects as on May 31, 2025.

Political and other agitations against the collection of tolls may affect the ability of the company to collect tolls over prolonged periods.

The EPC business is significantly dependent on long-term financing and capital investment. It is prone to general construction risks including delay in land acquisition and receipt of approvals for road construction etc.

Valuation

Consolidated re-stated revenue stood lower by 14% to Rs 495.72 crore in FY25 hit by decrease in tollway collection receipts and material sales. Though work contracts and real estate sales for the fiscal was higher that could not fully offset the fall in tollway collection receipts and material sales thereby dragging the overall sales. With the OPM contracting by 40 bps to 6.3%, OP was lower by 19% to Rs 31.32 crore. Eventually, net profit was higher by 4% to Rs 19.67 crore, gained by higher other income, lower interest and depreciation as well as lower tax incidence.

The EPS for FY5 on expanded equity at the upper price band is Rs 2.7. The P/E at the upper price band works out to 25.5 times.The company quotes at a P/BV of 2.4 times.

Though there is no comparable peer that gets a majority of revenue from toll collection projects the EPC/construction companies of similar size such as SRM Contractors and Madhav Infra quotes at a PE of 19.5 times and 14.2 times of their FY25 EPS and P/BV of 3.9 and 1.4 times. Similarly, slightly bigger players such as IRB Infrastructure Developers and HG Infra quote at a PE of 27.8 times and 13.9 times of their FY25 EPS and P/BV of 1.4 times and 2.3 times, respectively. Udayshivakumar reported a loss for FY25.

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