Highway Infrastructure shares hit 5% upper circuit after listing; IPO delivers 75% returns in first hour
(HIL) shares made a stellar debut on the BSE on Tuesday, delivering hefty gains to IPO investors within the first hour of trade. The momentum stayed strong, with the stock hitting the 5% upper circuit and notching up nearly 75% returns in under an hour.
Highway Infrastructure shares debuted at Rs 117 apiece, marking a 67% premium over the issue price of Rs 70.
The stellar debut followed a robust demand during the IPO phase, coupled with investor optimism towards the infrastructure sector, which continues to see strong order execution trends and a government push for development projects.
What should investors do now?
Brokerages tracking the company's IPO have maintained their positive stance on HIL, with a focus on its long-term potential in the infrastructure development and management segment.
Angel One
According to Angel One, HIL delivered stable financial performance in FY25, reporting revenue of Rs 495.72 crore and a profit after tax (PAT) of Rs 22.40 crore, resulting in a PAT margin of 4.5%. The company's EBITDA margin stood at 6.3%, while Return on Capital Employed (ROCE) and Return on Equity (ROE) were approximately 16.6% and 19%, respectively — levels that indicate efficient capital utilisation.
Angel One also noted the company's prudent financial management, with a healthy debt-to-equity ratio of 0.61x. The IPO, which raised Rs 130 crore, comprised a fresh issue of Rs 97.52 crore and an offer for sale of Rs 32.48 crore. Proceeds from the fresh issue will primarily be used to fund working capital requirements of Rs 65 crore, with the remaining amount earmarked for general corporate purposes.
Valuation-wise, HIL's IPO was priced at a post-issue P/E of 22.4x, which Angel One said was in line with sector peers. Backed by consistent order book execution, low leverage, and strong policy tailwinds in the infrastructure space, the brokerage has given the IPO a 'Subscribe' for long-term rating.
Bajaj Broking
Bajaj Broking has also assigned a 'Subscribe' for long-term recommendation on the stock. The brokerage highlighted that HIL is engaged in infrastructure development and management services, with toll collection as its primary segment, followed by EPC (Engineering, Procurement and Construction) and real estate segments.
Over the last three fiscals, HIL has posted an average Earnings Per Share (EPS) of Rs 3.13 and an average Return on Net Worth (RoNW) of 19.71%. On the financial performance front, the company's consolidated total income and net profit have grown steadily:
FY23:
Rs 456.83 crore revenue / Rs 13.80 crore PAT
FY24:
Rs 576.58 crore revenue / Rs 21.41 crore PAT
FY25:
Rs 504.48 crore revenue / Rs 22.40 crore PAT
Bajaj Broking noted that based on FY25 annualised earnings, the asking price valued the stock at a P/E of 22.44, while on FY24 earnings, the P/E stood at 23.41.
Highway Infrastructure IPO
details
The Rs 130 crore IPO was split into a fresh issue and an offer for sale. Of the Rs 97.52 crore fresh issue proceeds, Rs 65 crore will go towards funding working capital needs, with the balance allocated for general corporate purposes. The Rs 32.48 crore offer for sale provided an exit opportunity for some existing shareholders.
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