Highway Infrastructure
- Highway Infrastructure is coming out with a 100% book building; initial public offering (IPO) of 1,96,43,045 shares of Rs 5 each in a price band Rs 65-70 per equity share.
- Not more than 30% of the issue will be allocated to Qualified Institutional Buyers (QIBs), including 5% to the mutual funds. Further, not less than 30% of the issue will be available for the non-institutional bidders and the remaining 40% for the retail investors.
- The issue will open for subscription on August 5, 2025 and will close on August 7, 2025.
- The shares will be listed on BSE as well as NSE.
- The face value of the share is Rs 5 and is priced 13.00 times of its face value on the lower side and 14.00 times on the higher side.
- Book running lead manager to the issue is Pantomath Capital Advisors.
- Compliance Officer for the issue is Palak Rathore.
Profile of the company
Highway Infrastructure is an infrastructure development and management company. The company is engaged in the business of tollway collection, EPC Infra and real estate business. 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 which comprises of executing construction development projects of different types like roads, bridges, tanks, irrigation related construction and civil buildings etc., for customers.
The company is one of the few toll operators who have managed tollway collection based on ANPR technology on Delhi-Meerut Expressway. The company has operated tolls on some of the known inter-state and intra-state expressways across 11 states and one Union Territory. 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.
Its projects usually use both fund-based and non-fund-based banking facilities to meet the working capital requirements. Fund-based facilities provide the cash flow to cover its operating expenses, while non-fund-based facilities such as bank guarantees, etc. are used by the company to offer as a security under bid terms and are crucial for securing contracts in its EPC Infra and tollway collection projects. For securing bank guarantees, it needs to provide cash margin in the form of fixed deposits. The requirement to set aside incremental cash margins for additional contracts contributes to the overall need for higher working capital.
Proceed is being used for:
- Funding working capital requirements of the company
- General corporate purposes
Industry Overview
The Central Government is authorized to impose fees on national highways for various services like ferries, permanent bridges, temporary bridges, and tunnels. Toll collection typically operates under an open system, where fees are determined based on the length of the road segment. The Government mandated the use of FASTag from February 2021 onwards. In addition, the convenience of using digital payment modes has resulted in considerable growth in toll payments through the NETC platform. A total of 110 million FASTags were issued as of May 2025 through the NETC programme. The programme has seen 11.9% growth on y-o-y basis as of Mar-25, with a collection of Rs 68 Billion in FY25 and as of May-25 stands at Rs 71 Billion. In terms of volume and the amount collected May-25 has been the highest q-o-q sales. There has been an upside in toll collection after increase in Toll Operate Transfer (TOT) models and Monetization of assets by Government of India. Under this model, NHAI has monetised four TOT Bundle 11,12,13 and 14 and realized Rs 15,968 crore during the financial year 2023-24 totalling Rs 42,334 crore, so far.
Over the past nine years, the Ministry of Road Transport and Highways (MoRTH) has undertaken significant initiatives to bolster India's national highway infrastructure, playing a pivotal role in the nation's economic and social advancement. Notable achievements include a 60% expansion of the national highway network to 1,46,195 kilometres by 2024, with a substantial increase in four-lane and above highways and a reduction in narrower highways. Progress has been made on port connectivity projects, and special campaigns have met their objectives. New programs like the Bharat New Car Assessment Programme enhance vehicle safety, while the Vehicle Scrapping Policy and mobile applications like Rajmarg Yatra and NHAI One demonstrate a commitment to innovation and efficiency.
The outlook for toll traffic on national highways looks promising, showing a consistent upward trend in both the number of transactions and the derived revenue over the years. The Bharatmala Pariyojana, a comprehensive road development initiative, aims to enhance connectivity across India by constructing Economic Corridors, Inter-Corridors, and feeder roads. Phase-I, approved by the Cabinet Committee on Economic Affairs, targets the development of 34,800 km of roads, funded through various sources like toll revenue, budgetary support, and private sector investment. Furthermore, initiatives to improve connectivity for Char-Dham in Uttarakhand have been initiated, with ongoing works spanning 589 kilometers, indicating significant progress in infrastructure development nationwide.
Pros and strengths
Execution capabilities with industry experience: The company has close to 30 years of experience in running the tollway collection business and executing EPC Infra projects over multiples states in India. Its projects were in Madhya Pradesh, Gujarat, Andhra Pradesh, Punjab, Maharashtra, Telangana, Chhattisgarh, Haryana, Uttar Pradesh, Rajasthan, Odisha and Delhi. It is one of the few toll operators who have managed tollway collection based on ANPR technology on Delhi-Meerut Expressway. It has also operated tolls on some of the known inter-state and intra-state expressways across different states. The company employs updated Electronic Tollway collection (ETC) systems, which uses RFID tags and digital payment platforms to facilitate contactless toll payments. It reduces congestion at toll plazas but also improves operational efficiency by reducing transaction times and errors.
Diversified revenue base and portfolio: It is a company operating primarily in three sectors, namely, tollway collection, EPC Infra projects, and real estate business. Engaging in multiple sectors helps it to diversify its revenue streams, reduces dependency on a single sector and helps to identify more profitable opportunities. The company also earns from business auxiliary activities like leasing of spare equipment, sale of surplus material etc.
Experienced management team: The company is led by its Promoters and the management team which has experience in the businesses which it operates. Its management team consists of a mix of individuals with professional, technical and commercial experience in various fields. Its Managing Director, Arun Kumar Jain looks after the coordination, management and implementation, planning and overall management of the company. Its Whole-time Director and CFO, Anoop Agrawal handles financial matters, coordination with governmental bodies and implementation of new business opportunities. Its CEO, Ankit Tandon handles day to day operations of the company besides overlooking bidding process, execution and delivery.
Order Book & financial performance: As on May 31, 2025, the company’s consolidated Order Book is Rs 6,663.07 million comprising of Rs 595.30 million in tollway collection business and Rs 6,067.77 million in EPC Infra business. Its Order Book helps it to plan its revenues, operations and project execution. Its revenue from operations increased from Rs 4,551.33 million in Fiscal 2023 to Rs 4,957.15 million in Fiscal 2025 at a CAGR of 4.36% while its profit for the year increased from Rs 138.00 million in Fiscal 2023 to Rs 223.98 million in Fiscal 2025 at a CAGR of 27.40%. Its EBITDA, on a consolidated basis, has grown at a CAGR of 6.36% from Fiscal 2023 to Fiscal 2025.
Risks and concerns
Majority of revenue comes from tollway collection business: The company currently derives majority of its revenues from tollway collection business which are primarily awarded by NHAI. There are several factors outside of its control that may result in a NHAI's decision to discontinue awarding projects to it or prematurely terminate existing projects, including changes in strategic priorities, a demand for price reductions, market dynamics and financial pressures. The company has garnered 77.14%, 83.42% and 78.32% of its revenue from top Tollway Collection in FY25, FY24 and FY23 respectively. If NHAI does not award additional projects to it or if it fails to expand the size of its business with them, or expand to additional customers, its business, profits and results of operations could be adversely affected.
Geographical constrain: The company’s business is relatively concentrated in certain specific parts of India. The company’s majority of revenue comes from Gujarat, Maharashtra and Madhya Pradesh. Any change or regional slowdown in construction activities or reduction in infrastructure projects in these areas for any reasons may reduce the amount of projects that it develops and operate and any such reduction in projects may adversely affect its business, results of operations and financial condition.
Business is subject to seasonal and other fluctuations: The company’s business and operations may be affected by seasonal factors which may restrict its ability to carry on activities related to its projects and fully utilize its resources. The traffic flow and its tollway collections during the monsoon period are generally lower as compared to other periods of the year. The toll collection industry in India often faces a decline during the second quarter of the fiscal, largely attributed to the monsoon season. This seasonal fluctuation is closely tied to India's varied geographical landscapes, where heavy rainfall and adverse weather conditions disrupt traffic flow, particularly in regions prone to flooding and poor road conditions.
Dependent on third parties for the supply of raw materials, services and finished goods: The company’s business is significantly affected by the availability, cost and quality of the raw materials, which it need to construct, develop and provide for its projects, and services. The prices and supply of raw materials depend on factors beyond its reasonable control, including domestic and international general economic conditions, demand and supply chain, competition, availability of quality suppliers, production levels, transportation costs and import duties. If, for any reason, its primary suppliers of raw materials should curtail or discontinue their delivery of such materials to it in the quantities it needs, provides it with raw materials that do not meet its specifications, or at prices that are not competitive or not expected by it, the company’s ability to meet its material requirements for its projects could be impaired, its construction schedules could be disrupted and its results of operations and business could suffer.
Outlook
Highway Infrastructure is an Indian infrastructure development and management company engaged in tollway collection, EPC projects, and real estate development. The company specializes in the construction and maintenance of roads, highways, bridges, and residential projects. The company is among the few toll operators using ANPR (Automatic Number Plate Recognition) technology for tollway collection on the Delhi-Meerut Expressway. Toll collection operations extend across 11 states and one Union Territory. On the concern side, the company derives significant portion of revenue from operations from its tollway collection business which is primarily undertaken for and awarded by the NHAI. Further, most of its revenue in the EPC Infra business is from public sector customers. The loss of any of its contracts, particularly in its tollway collection business may have a material and adverse effect on its business and financial results. The company’s business is relatively concentrated in certain specific parts of India and any adverse development in such parts of India may adversely affect its business, results of operations and financial condition.
The issue has been offering 1,96,43,045 shares in a price band of Rs 65-70 per equity share. The aggregate size of the offer is around Rs 127.68 crore to Rs 137.50 crore based on lower and upper price band respectively. Minimum application is to be made for 211 shares and in multiples thereon, thereafter. On performance front, the company’s revenue from operations decreased by 13.56% from Rs 5,734.54 million in Fiscal 2024 to Rs 4,957.15 million in Fiscal 2025, a decrease of Rs 777.39 million. The decrease in revenue was primarily on account of decrease in tollway collection receipts. Moreover, the company’s profit for the year increased by 4.60% from Rs 214.14 million in Fiscal 2024 to Rs 223.98 million in Fiscal 2025, an increase of Rs 9.84 million.
As part of its strategy and constant growth process, the company intends to keep focusing on the growing its tollway collection business and EPC Infra business and endeavour to improve its financial performance. Total tolling length is expected to grow in future with increasing toll revenue for the government. The outlook of the toll industry remains positive as more and more roads length of km is expected to be completed by 2025 generating revenue’s in future. Vision 2047 plans to develop 50,000 kilometers of access-controlled expressways, ensuring any location in India is within 100-125 kilometers of one. The Bharatmala Pariyojana, a comprehensive road development initiative, aims to enhance connectivity across India by constructing Economic Corridors, Inter-Corridors, and feeder roads. Its intention is to bid for such new road projects to build its order book and revenues. It intends to leverage on its previous experience of operating tollway in ANPR technology. It also aims to bid for larger projects on sole or joint bidding basis, as its management may deem beneficial for the company considering prevailing business conditions.
