H.G. Infra Engineering Limited: Navigating Growth and Diversification in India's Infrastructure Landscape

H.G. Infra Engineering Limited, a prominent player in India's infrastructure sector, recently unveiled its financial and operational performance for Q2 and H1 FY26, offering insights into its strategic direction amidst a dynamic market. The company, known for its robust execution capabilities, is actively diversifying its portfolio beyond its traditional stronghold in roads and highways, venturing into high-growth segments like Battery Energy Storage Systems (BESS), green hydrogen, and transmission and distribution.

For Q2 FY26, H.G. Infra reported a consolidated revenue from operations of INR904.50 crores, marking a marginal year-on-year increase of 0.2%. The consolidated EBITDA for the quarter stood at INR206.23 crores, with a margin of 22.8%, while Profit After Tax (PAT) was INR51.84 crores, reflecting a margin of 5.7%. For the first half of the fiscal year (H1 FY26), consolidated revenue reached INR2,386.71 crores. While these figures indicate a period of consolidation and strategic realignment, management has provided clear explanations for the performance trends, particularly regarding margin softness and debt levels.

Strategic Diversification and Future Growth Avenues

H.G. Infra's strategic vision is clearly focused on expanding its footprint in emerging infrastructure segments. The company is making significant strides in the Battery Energy Storage Systems (BESS) sector, which is projected for dramatic growth, scaling from 0.2 gigawatts in 2024 to an estimated 66 gigawatts by 2032. This expansion, driven by ambitious renewable energy targets and declining battery costs, positions BESS as a critical component for grid stability and clean energy supply. H.G. Infra has already secured substantial BESS projects, with a cumulative contracted capacity of 735 megawatts/1,470-megawatt hour, and expects to book INR150-250 crores in revenue from BESS projects in the current fiscal year.

Another key initiative is the company's foray into green hydrogen production, aligning with India's mission to achieve 5 MTPA green hydrogen by 2030. H.G. Infra has already participated in a tender for Numaligarh Refinery Limited for 10,000 tons of green hydrogen supply, leveraging its expertise in renewable energy power generation. Furthermore, the company aims to secure INR1,000 crores in transmission and distribution projects in FY26, having already secured one project valued at INR350 crores. By FY27, H.G. Infra intends to expand its non-road infrastructure portfolio to approximately 35%, with a keen eye on building construction and real estate.

Order Book and Financial Strengthening

As of September 2025, H.G. Infra boasts a robust order book of INR13,933 crores, spread across 29 active projects in 13 Indian states. This diversified order book includes significant contributions from roads and highways (56%), rails and metros (20%), and renewables (14%). The company's Book to Bill Ratio consistently remains above the industry average, indicating a healthy pipeline of future work.

In a significant move to strengthen its balance sheet and enhance financial flexibility, H.G. Infra has initiated the monetization of five Hybrid Annuity Model (HAM) projects. A binding offer document was executed in August 2025 with Neo Infra Income Opportunities Fund to sell 100% equity stake in these subsidiaries. The transaction, valued at an enterprise value of INR3,584 crores, is expected to conclude within the current financial year, with H.G. Infra receiving INR1,384 crores after debt obligations. The funds realized from this monetization will be strategically deployed into new HAM bids and other high-return infrastructure opportunities.

Addressing Challenges and Outlook

While the company's strategic initiatives are strong, H.G. Infra acknowledged certain challenges during the quarter. A sharp increase in debt levels in Q2 FY26 was attributed to advances to vendors and pending HAM bank disbursements. Additionally, a softness in EBITDA margins was noted, partly due to project-specific issues and a 'change in law' impact on the Ganga Expressway project, which may lead to arbitration. Project delays due to abnormal rains also affected some sites. However, management expressed confidence in resolving these issues, with debt levels expected to normalize in the coming quarters and project execution anticipated to pick up.

Looking ahead, H.G. Infra aims to secure new order inflows of INR10,000-11,000 crores in FY26. The company projects full-year revenue for FY26 to be between INR6,500-7,000 crores, and for FY27, it anticipates revenue of INR7,800-8,000 crores, representing approximately 15% growth. The management's proactive approach to diversification, financial optimization, and transparent communication underscores its commitment to sustained growth and value creation for all stakeholders.