Highway Infrastructure Limited (NSE:HILINFRA) has received a long-term credit rating of IVR BBB+/Stable and short-term rating of IVR A2 from Infomerics Valuation and Rating Limited for its bank loan facilities totalling Rs 200.88 crore. The announcement was filed with the NSE and BSE on 27 July 2026. The stable outlook reflects the company's expected growth trajectory supported by its existing order book and order execution capability.
Key Highlights
- Infomerics assigned a long-term rating of IVR BBB+/Stable to Highway Infrastructure's bank facilities, indicating upper-medium credit quality with stable prospects.
- Short-term rating of IVR A2 was assigned, denoting adequate short-term payment capacity and liquidity.
- Total rated bank loan facilities amount to Rs 200.88 crore as disclosed in the rating announcement.
- The company's order book stood at Rs 1,614.06 crore as of 31 March 2026, comprising toll collection contracts of Rs 765.71 crore and engineering, procurement and construction contracts of Rs 848.35 crore.
- Equity infusion through the company's IPO in FY26 strengthened its capital structure, with adjusted tangible net worth increasing to Rs 228.18 crore as of 31 March 2026 from Rs 117.57 crore as of 31 March 2025.
- Operating income grew to Rs 612.98 crore in FY26 from Rs 503.73 crore in FY25, driven primarily by toll collection segment growth of approximately 23 percent.
- The rating agency noted exposure to traffic risk, toll contract renewal uncertainty, and moderate operating margins as rating constraints.
About the Company
Highway Infrastructure Limited is an NSE and BSE-listed infrastructure company incorporated under the Companies Act 2013 with CIN L42909MP2006PLC018398. Headquartered in Indore, Madhya Pradesh, the company operates across three business segments: toll collection, engineering procurement and construction (EPC), and real estate development. The toll collection segment contributed approximately 77 percent of total operating income in FY26, generating revenues primarily through contracts awarded by the National Highways Authority of India (NHAI) and various state government agencies across multiple states including Madhya Pradesh, Andhra Pradesh, Gujarat, Uttar Pradesh, Haryana, Rajasthan, Delhi, Punjab, and Chhattisgarh. The EPC segment contributed 19 percent of total operating income in FY26 and executes highway, bridge, urban infrastructure, and building projects for government bodies including NHAI, Public Works Departments, and municipal authorities. The company's equity shares were listed on the NSE and BSE on 12 August 2025 following its initial public offering.
Announcement in Detail
Infomerics Valuation and Rating Limited has assigned an upper-medium long-term credit rating of IVR BBB+/Stable and a short-term rating of IVR A2 to Highway Infrastructure's bank loan facilities. The total rated facilities amount to Rs 200.88 crore. These ratings indicate that the company possesses adequate financial strength to meet its debt obligations, though the credit quality is susceptible to unfavourable economic conditions. The stable outlook designation indicates that the rating agency expects Highway Infrastructure to maintain its growth trajectory in the near to medium term, supported by timely and efficient execution of its existing order book and its demonstrated ability to secure new orders.
The rating assignment reflects Infomerics' assessment of the company's diversified revenue streams, promoter experience spanning three decades in the construction sector, and healthy operational scale. The company's consolidated financial performance showed operating income of Rs 612.98 crore in FY26 compared to Rs 503.73 crore in FY25. Toll collection revenue grew approximately 23 percent year-on-year to Rs 471.43 crore in FY26 from Rs 382.41 crore in FY25, primarily driven by higher toll collections under NHAI fee collection contracts. The company's adjusted tangible net worth improved significantly to Rs 228.18 crore as of 31 March 2026 from Rs 117.57 crore as of 31 March 2025, following the equity capital raised through its IPO.
The rating agency identified several constraints affecting the rating assessment. The company faces moderate operating margins, which declined to approximately 5.1 percent in FY26 from 7.2-8.5 percent during FY22-FY24. This decline was attributed to increased sub-contracting expenses and site labour costs, which combined represented approximately 84 percent of work contract receipts in FY26 compared to 78 percent in FY25. Additionally, employee costs increased approximately 30 percent to Rs 11.81 crore in FY26 from Rs 9.02 crore in FY25, and the company recognised bad debt expense of Rs 4.68 crore during the financial year. The rating agency also noted exposure to traffic risk, toll contract renewal uncertainty, working capital requirements, and competitive pressures in the infrastructure sector as ongoing rating considerations.
Impact on Investors
The credit rating assignment provides investors with an independent assessment of the company's ability to service its debt obligations from a third-party rating agency. The BBB+/Stable rating indicates that Highway Infrastructure possesses satisfactory financial capacity to meet its financial commitments, though the company remains exposed to economic downturns that could affect toll revenues and construction order execution. Investors will note that the stable outlook reflects the agency's confidence in the company's ability to maintain its growth trajectory, contingent on timely project execution and sustained order acquisition. The rating confirmation on Rs 200.88 crore of bank facilities provides clarity on leverage levels and debt service capacity as assessed by an RBI-regulated rating agency.
The filing shows that the company's capital structure has strengthened materially since its IPO listing in August 2025. Leverage ratios improved substantially, with the long-term debt-to-equity ratio declining to 0.09x as of 31 March 2026 from 0.14x as of 31 March 2025, and overall gearing ratio on adjusted tangible net worth declining to 0.48x from 0.65x over the same period. Shareholders will observe that debt service coverage indicators remained satisfactory though moderated during FY26, with the interest coverage ratio at 4.89x and total debt-to-EBITDA ratio at 3.34x. The disclosed terms indicate that the company's ability to sustain the stable outlook will depend on maintaining operating margins around 7 percent, managing execution costs effectively, and securing fresh orders on a sustained basis, factors that rating agencies will continue to monitor in future rating reviews.
Sector / Market Context
Highway Infrastructure operates within India's infrastructure development sector, which is supported by government spending on road connectivity and toll collection models that have become increasingly prevalent for highway financing. The NHAI, a statutory body responsible for development and management of national highways, awarded most of the company's toll collection contracts. The company's diversified geographical presence across nine states and union territories reflects the scale of toll collection opportunities across India's road network. The EPC segment benefits from continued government investment in civil infrastructure projects including highways, bridges, and urban development initiatives. The toll collection model provides relatively stable cash flows compared to traditional EPC contracting, as the company retains revenues above contracted royalty payments to NHAI, though this model introduces exposure to traffic volumes and toll realisation rates. India's toll infrastructure sector remains concentrated among a limited number of operators with established government relationships, creating barriers to entry for new market participants while supporting the competitive positioning of established players like Highway Infrastructure.