| Highway Infrastructure Limited | ||||||
| Ratings reaffirmed at 'Crisil BBB/Positive/Crisil A3+'; Rated amount enhanced for Bank Debt | ||||||
| Rating Action | ||||||
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| Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale Crisil Ratings has reaffirmed its ‘Crisil BBB/Positive/Crisil A3+’ ratings on the bank facilities of Highway Infrastructure Limited (HIL).
The ratings continue to reflect the established market position of the company and the extensive experience of the promoters in the construction industry, with healthy financial risk profile. These strengths are partially offset by the modest scale of operations, large working capital requirement, susceptibility to risks inherent in tender-based business and moderate contribution from the engineering, procurement and construction (EPC) segment. |
Analytical Approach Crisil Ratings has evaluated the standalone business and financial risk profiles of HIL. |
Key Rating Drivers & Detailed Description Strengths: Established market position and extensive experience of the promoters: The promoters have experience of more than 20 years in the construction industry, strong understanding of the local market dynamics and established relationships with customers and suppliers, which should continue supporting the business over the medium term. The company has diversified into management and operations of tolls and construction business, with an order book of more than Rs 650 crore providing healthy revenue visibility from this segment over the medium term. The revenue in fiscal 2025 remained at ~Rs 419 crore compared with ~Rs 402 crore in fiscal 2024 due to delay in the execution of toll projects. Furthermore, the revenue is expected to improve in fiscal 2026 on account of in-hand orders and toll collection projects, which will be monitorable over the medium term.
Healthy financial risk profile: Networth is estimated to have been healthy at around Rs 111 crore as on March 31, 2025. Total outside liabilities to adjusted networth (TOLANW) ratio was 0.91 time and the gearing was moderate and estimated at 0.55 time as on March 31, 2025. The debt protection metrics are comfortable as indicated by the interest coverage ratio of around 4.5 times and the net cash accrual to adjusted debt ratio of 0.33 time in fiscal 2025. The financial risk profile should remain comfortable over the medium term.
Weaknesses: Susceptibility to risks inherent in tender-based business: Revenue and profitability entirely depend on the ability to win tenders. Because of the intense competition, HIL has to bid aggressively to get contracts, which restricts its operating margin. Also, owing to cyclicality inherent in the construction industry, the ability to maintain profitability through operating efficiency becomes critical.
Large working capital requirement: Operations are moderately working capital intensive in nature and are related majorly to the EPC segment. Inventory and payables are minimal in the toll management segment. Bank guarantee of around two weeks of collection is kept as deposit with the principle while the collections are deposited every week in the toll management segment. However, in the EPC segment, HIL maintains 30-45 days of inventory which are largely order-backed while the monthly bills raised are cleared within 30-45 days. Net gross current assets (NGCA), calculated against the EPC segment sales, are around 200 days. The working capital requirements are expected to remain high driven by various deposits like earnest money, security deposits and retention money, required to be provided to the customer.
Modest revenue contribution from EPC segment: Operating margin in the EPC segment is 12-13% whereas the margin in the toll management segment stands at 5.0-5.5%. Revenue contribution from the toll segment remained stable due to delay in tender executions in fiscal 2025 leading to low overall operating margin of 5.0-5.5%. Increased contribution from the EPC segment is expected, backed by healthy in-hand order book. The same should lead to improvement in the overall operating margin, leading to higher-than-expected net cash accrual and will remain monitorable. |
Liquidity: Adequate Bank limit utilisation was moderate at 62% on average for the 12 months through March 2024. Net cash accrual is expected to be over Rs 28 crore against term debt obligation of Rs 1.5-2.5 crore over the medium term, and will cushion liquidity. The current ratio was healthy at 1.69 times as on March 31, 2025. Low gearing and moderate networth support the financial flexibility and provide the financial cushion available in case of any adverse condition or downturn in the business. |
Outlook: Positive Crisil Ratings believes HIL will continue to benefit from the extensive experience of its promoters and above-average financial risk profile. |
Rating sensitivity factors Upward factors
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About the Company Incorporated in 2018 in Indore (Madhya Pradesh), HIL executes projects for roads, bridges and building construction. It also undertakes toll collection projects. Mr Arun Jain and Mr Anoop Agarwal are the promoters. |
Key Financial Indicators
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Status of non cooperation with previous CRA HIL has not cooperated with Brickwork Ratings India Pvt Ltd, which has published its ratings as ‘issuer not cooperating’ vide a release dated March 26, 2020. The reason provided by Brickwork Ratings India Pvt Ltd was non-furnishing of information by HIL for monitoring the ratings. |
Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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* - Issuer did not cooperate; based on best-available information
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| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Criteria Details
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