Infra Q4 preview: HDFC Securities expects robust revenue growth, margin to take a hit

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26 Aug, 2025 12:21

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HDFC Securities expects aggregate Q4 revenue of the infra companies it covers to grow 22.1 percent YoY. Further, the brokerage said it expects the EBIDTA and PAT to grow 19 percent and 8 percent YoY, respectively.

However, it projects the Q4 EBIDTA margin to decline 43 basis points to 17.1 percent.

The brokerage expects NCC, Sadbhav Engineering,  Ashoka Buildcon, Ahluwalia Contracts, PSP Projects, HG Infra and Capacite Infra to post strong results

This is despite the National Highways Authority of India (NHAI) has awarded far less than the expected number of contracts.

NHAI awarded Rs 45,000 crore worth of new projects with Rs 30,000 crore in EPC segment and Rs 15,000 crore under Hybrid-Annuity Model (HAM). This is a sharp drop from FY19 project award guidance of Rs 1.2 lakh crore.

Delays in financial closure of earlier HAMs (financial sector aversion to lending to Infra), challenges in land acquisition, NBFC liquidity tightening, ILFS issue and changes in EPC Model concession agreement impacted awards.

However, the NHAI tender pipeline remains healthy at Rs 1 lakh crore with these projects expected to be awarded during July-March ’20E period, HDFC Securities.

Hence after elections, HDFC Securities expects order visibility to improve. The brokerage said the balance sheets of companies in its coverage universe are strong, net-working capital under control and financial closure (FC) challenges are largely behind.

"Our coverage universe has achieved FC for all projects (excluding new HAMs). Appointed date (AD) is awaited, which is expected by June-19E end. Developers/Bankers are insisting on at least 80 percent land before taking AD, this is also impacting projects start. They have maximum 8/12 HAMs pending AD whilst KNR Constructions, HG Infra, PNC Infra, IRB Infra have three projects’ AD pending. Sadbhav Engineering and Ashoka Buildcon have four ADs pending," the HDFC Securities said.

Book to bill comfortable at 3.5x FY19 revenue:

Despite weak NHAI ordering, State Highway awards (Purvanchal and Mumbai Nagpur) contributed ~Rs 41,000 crore to EPC projects ordering. This led to new order wins for Sadbhav, PNC, NCC and Dilip Buildcon (got 1 package each in Mumbai Nagpur), HDFC Securities said. PNC got 2 EPC packages in Purvanchal.

Top Picks:

PNC Infra, KNR Constructions, NCC, Capacite Infra, Ahluwalia Contracts