Highway Infrastructure shares to list tomorrow, GMP sharply declines to 34%; what should allottees do?

Highway Infrastructure IPO

The shares of Highway Infrastructure are set to make their market debut tomorrow (August 12). Despite seeing strong investor interest during its three days of public bidding, the IPO has seen a sharp decline in its grey market premium.

The tollway operator's Rs 130-crore IPO was subscribed more than 300 times between August 5 and August 7. 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 at a price band of Rs 65-70 per share.

Highway Infrastructure IPO GMP:

Ahead of listing, the unlisted shares of the company were trading at Rs 94 apiece in the grey market, according to data on Investorgain and IPO Watch. This implies a grey market premium (GMP) of over 34 percent over the IPO price of Rs 70 per share. While the current GMP also signals strong listing, it has significantly fallen from the 57 percent quoted last week. On the day of IPO allotments, the shares were trading with 41 percent GMP.

Highway Infrastructure IPO: What to expect?

Anand Rathi had 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.

Incorporated in 1995, Highway Infrastructure Ltd (HIL) is engaged in tollway collection, EPC (Engineering, Procurement, and Construction) projects, and real estate development. The Indore-based company specialises in the construction and maintenance of roads, highways, bridges, and residential projects.

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