Let me tell you a story about a company that built a ₹700 crore solar project... and the market saw none of it.
This is HG Infra Engineering — one of India’s most consistent infra executors. If you've driven on a clean highway through Rajasthan or ziplined across metro rails in Delhi, chances are, HG Infra had something to do with it.
And yet, in FY25, things looked like they were falling apart.
Stock down 40%. Revenues looked flat. Earnings uninspiring.
But that’s just the optics.
I’ve spent the past few days knee-deep in their Q1 to Q3 concalls, investor decks, and annual report. And what I found is what I love about researching companies: the truth is rarely on the surface.
Let’s get into it.
Not Broken. Just Misunderstood.
HG Infra builds roads, highways, metro rail, and now solar parks + BESS (Battery Energy Storage Systems). Their core business is EPC — engineering, procurement, and construction. High execution, low leverage, and historically, high RoCE.
But FY25 looked bad. Why?
Because their solar EPC business — where they executed ₹700 Cr worth of projects — wasn’t reported as revenue.
Internal billing. SPV accounting. Group eliminations.
They did the work. But the revenue stayed invisible.
The Solar Illusion
That’s ₹700 Cr of EPC work — entirely executed — but never shown in the P&L.
It’s like building a power plant and telling your banker, "Trust me, it’s there."
Accounting rules make the P&L look ugly. But operationally? They’ve been flying.
Here’s what almost no one noticed — HG Infra earned ~18% EBITDA margins on their solar EPC projects under the KUSUM scheme. That’s wildly above industry peers who average 7–10%.
How? They executed solar plants strategically:
- Close to substations (minimal transmission infra)
- On government-leased or low-cost land
- With efficient project turnaround and strong site-level teams
These optimizations turned solar into one of the highest-margin verticals HG Infra has ever run.
This isn’t just infra. It’s smart infra.
Order Book Isn’t Everything
One of the biggest surprises? The order book actually shrank in Q3 — from ₹16,623 Cr in Q1/Q2 to ₹15,080 Cr.
But don’t misread that. It’s not weakness. It’s focus. HG is prioritizing execution over chasing every tender.
The Debt Side of the Story
When I saw the debt number shoot up to ₹3,233 Cr, I raised an eyebrow. But digging deeper?
Most of this is project debt, specifically solar-related working capital, raised to fund execution before approvals came in. It’s temporary. Not structural.
When Infra Bites Back
Execution isn’t always smooth. The DMRC metro project turned out to be a margin killer. Sewer realignments, design delays, and utility headaches pushed margins to just 3%.
HG called it a "learning experience" on the Q2 concall. I respect that.
The Working Capital Monster
You can’t ignore this one. ₹1,750 Cr locked in receivables + unbilled revenue.
The engine’s running. But the fuel — cash — is stuck. The sooner solar SPVs reach the billing stage, the faster this frees up.
So What’s the Real Story?
HG Infra isn’t having a bad year. It’s having a complex one.
They’re evolving from a roads-only EPC player to a solar+BESS hybrid infra powerhouse. And that comes with balance sheet stress, accounting weirdness, and market confusion.
But the core? Still rock solid.
If they deliver a clean Q4 with solar billing unlocked and receivables narrowing — this could be one of FY26’s strongest comeback stories.
Disclaimer: This article is for informational purposes only. It is not investment advice. Please do your own research or speak with a financial advisor before making any investment decisions.
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