Highway Infrastructure IPO subscribed 27x on Day 1, GMP over 57%; should you apply?

Highway Infrastructure IPO

Highway Infrastructure’s initial public offering (IPO) drew strong investor interest on the first day of public bidding. The tollway operator's Rs 130-crore IPO was subscribed more than 27 times on August 5.

The IPO received bids for more than 43.38 crore shares, as against the offer size of 1.6 crore shares, according to data on NSE. Retail investors subscribed their reserved portion more than 29 times. Non Institutional Investors (NII) booked their reserved portion over 33 times. Qualified Institutional Buyers (QIB) subscribed the portion kept for them around 5 times.

Key things to know about Highway Infrastructure IPO:

The Madhya Pradesh-based company launched its IPO to raise Rs 97.52 crore through a fresh issue of shares and Rs 32.48 crore through offer-for-sale of 46.4 lakh shares by the existing promoters. It IPO will remain open for public bidding from August 5 to August 7 at a price band of Rs 65-70 per share.

Investors can bid for a minimum of 211 shares, requiring an investment of Rs 14,770, and in multiples thereafter. The allotments will likely be finalised by August 8, and the shares will likely debut on BSE and NSE on August 12.

Highway Infrastructure IPO GMP:

Ahead of listing, the unlisted shares of the company were trading at Rs 110 apiece in the grey market, according to data on Investorgain. This implies a grey market premium (GMP) of over 57 percent over the IPO price of Rs 70 per share.

According to IPO Watch, the unlisted shares were trading with nearly 59 percent GMP.

Should you apply for Highway Infrastructure IPO?

Anand Rathi advised investors to subscribe to the public issue for the long term. “The use of ANPR (Automatic Number Plate Recognition) technology in toll systems provides a competitive advantage, while the combination of toll and EPC businesses offers diversified revenue streams. Considering these factors, the IPO seems fully priced,” it said.

If we attribute FY25 annualized earnings then the asking price is at a P/E of 22.44. Based on FY24 earnings, the P/E stands at 23.41, said Bajaj Broking, while advising investors to subscribe to the issue for the long term.

"Highway Infrastructure Ltd.’s IPO arrives at a time when India’s infrastructure push is being actively translated into on-ground execution, particularly in roads, tollways, and urban development," said Bhavik Joshi, Business Head, INVasset PMS. "The company’s topline contraction in FY25, despite an uptick in net profits, warrants a closer look. The surge in profitability may partly reflect one-off efficiencies or contract timing, which should be normalized before projecting forward valuations. With a current order book of ₹666 crore — 90% of which stems from EPC — the company’s earnings visibility appears medium-term, especially if toll revenues remain sub-scale. At the upper price band, the IPO demands a P/E multiple of over 22x FY25 earnings — placing it between larger, established infra players and mid-sized EPC peers. While this is not unreasonable, it leaves limited margin of safety for near-term investors," he added.

"From a macro perspective, India’s infra spend remains a durable theme, particularly in transport and housing. Investors with a multi-year horizon may find merit in HIL’s digitized toll operations and regional EPC execution. Yet pricing discipline and project scalability will be critical for consistent value creation. A measured, allocation-based approach is advisable," he further said.

A day before the IPO opened for public bidding, Highway Infrastructure raised Rs 23.4 crore from four institutional investors via anchor book on August 4. The company in its filing to exchanges on Monday said it has finalised allocation of 33.4 lakh shares to anchor investors at Rs 70 per share.

VPK Global Ventures Fund has invested Rs 8.4 crore against nearly 12 lakh shares in Highway Infrastructure, while HDFC Bank, Abans Finance, and Sunrise Investment Opportunities Fund bought 7.14 lakh shares worth Rs 5 crore each.

The infrastructure development and management company that is involved in tollway collection, EPC infra and real estate businesses intends to spend Rs 65 crore of the fresh issue proceeds for its working capital requirements, and the remainder funds for general corporate purposes.

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