H.G. Infra Engineering Ltd Management Discussions

Economic Review

Global Economy1

The global economy remained resilient despite headwinds from higher trade barriers and elevated uncertainty arising from geopolitical conflicts such as the Middle East war, which disrupted the key energy route through the Strait of Hormuz. Additional pressures stemmed from shifting trade policies, inflated tariff risks and heightened financial market volatility.

These challenges were partly offset by technology-driven investment, accommodative financial conditions and supportive fiscal and monetary policies. As a result, the global economy sustained moderate growth of around

3.5% in CY 2025.

Global trade flows remained resilient but reflected evolving patterns, including reduced imports from China and increased trade with countries such as Vietnam and Taiwan. This shift has been driven by supply chain reconfiguration amid geopolitical tensions, trade conflicts, elevated US tariffs and cost advantages in Southeast Asia, along with policy adjustments across major economies.

Companies accelerated supply chain diversification and strengthened domestic manufacturing capabilities, leading to a gradual realignment of global trade. Technology-related trade remained a key growth driver, partially offsetting slower momentum in other segments. These trends continued to influence sectors linked to capital expenditure, infrastructure and industrial expansion.

Advanced economies recorded moderate growth of 1.9%, while emerging market and developing economies (EMDEs) grew at a faster pace of

4.5%. Among EMDEs, India remained a key growth driver, supported by strong consumption and investment demand. This momentum contributed meaningfully to overall global growth.

Outlook

Geopolitical developments, particularly in energy-sensitive regions such as West Asia, continue to create uncertainties across global energy markets and supply chains. Such disruptions may influence commodity prices, logistics costs and industrial input expenses, thereby affecting inflation trends and overall economic activity across regions.

According to projections by the International Monetary Fund, global economic growth is expected to moderate to 3.0% in CY 2026 and 3.4% in CY 2027, assuming geopolitical tensions remain contained. However, any prolonged escalation could weaken growth momentum, tighten financial conditions and increase pressure on global markets. Additional concerns such as geopolitical fragmentation, elevated public debt levels and weakening institutional confidence

may further weigh on the global economic environment.

The outlook also remains influenced by external factors including trade policy developments, energy market fluctuations and movements in global financial markets. Central banks are expected to continue focusing on price stability, with monetary policy actions aligned to evolving inflation conditions. In this environment, policy credibility, economic adaptability and international cooperation are expected to remain important for supporting resilience and long-term stability.

Indian Economy

The Indian economy maintained strong growth momentum in FY 2025-26, with real GDP expanding by 7.7%, supported by robust domestic demand, sustained investment activity and stable macroeconomic fundamentals.2 Growth

was led by the services and manufacturing sector, with resilience maintained despite global uncertainties, including geopolitical tensions, elevated energy prices and supply chain disruptions.

Domestic demand remained the primary growth driver. Private Final Consumption Expenditure (PFCE) and Gross Fixed Capital Formation (GFCF) grew by 9.4% and 9.9%, respectively. Rural demand remained stable, supported by agriculture, while urban consumption improved alongside services sector activity.

Inflation remained broadly contained, with headline CPI below the 4% target. Inflation witnesses a gradual uptick towards the end of the year, rising from 2.7% in January 2026 to 3.4% in March 2026, primarily due to food price pressures.3 In this context, the Reserve Bank of India maintained a supportive monetary stance. The policy repo rate was reduced by 100 basis points during the year to 5.25%, while

liquidity conditions ensured adequate credit availability.4

Fiscal discipline and stable revenue mobilisation reinforced growth. Infrastructure-focused government spending, along with improved GST collections and digital adoption, supported investment activity and efficiency. Public investments in transportation, energy and logistics, backed by initiatives such as PM Gati Shakti and the National Infrastructure Pipeline, drove industrial output and capacity creation across sectors. Capacity utilisation has improved to around 75%- 76%, indicating gradual recovery in private investment and strengthening demand infrastructure-linked sectors.5 Regulatory measures by the Reserve Bank of India further supported credit flow, with provisioning requirements for under-construction infrastructure projects reduced from 5% to 1%.6

Indirect tax reforms, particularly GST, have streamlined the tax framework. Concurrently, trade agreements such as the India-EU Free Trade Agreement and ongoing discussions with the US are strengthening Indias role in global value chains. The India-EU FTA, with bilateral trade at approximately ^ 11.50 lakh crore (USD 136.50 Billion) and exports to the EU at Rs. 6.40 lakh crore, is expected to provide preferential access to over 99% of Indian exports, supporting trade growth, employment and investment inflows.7

This trajectory aligns with the Governments long-term vision of Viksit Bharat 2047, which emphasises sustained growth, infrastructure expansion and productivity enhancement as key pillars of economic transformation.

Outlook

The Indian economy is expected to maintain a stable growth trajectory, supported by strong domestic fundamentals and continued policy support. Growth is expected to remain driven by domestic demand, with sustained emphasis on infrastructure development and capital expenditure.

Elevated public investment, improving capacity utilisation and stronger corporate and financial sector balance sheets are expected to support a gradual increase in private investment. Policy initiatives are expected to continue to drive growth, strengthening export competitiveness. The Union Budget 2026-27 reinforces this outlook, with public capital expenditure of around ^12.20 lakh crore, that is 3.1% of, sustaining the infrastructure-led growth strategy.8

Despite global uncertainties, including commodity price volatility and geopolitical risks, Indias macroeconomic position remains strong. Foreign exchange reserves of around US$ 697.10 billion and diversified growth drivers are expected to provide resilience and support sustained expansion. 9

Industry Overview

Indias Infrastructure Sector

Indias Infrastructure sector continues to remain cornerstone of the countrys growth story, underpinning Indias aspirations of becoming a developed economy by 2047. The sector continued to support growth, employment and urban transformation amid strong macroeconomic conditions. This was reflected in on-ground execution, with over 5,300 km of national highways constructed and road sector capital expenditure exceeding Rs. 2.44 lakh crore,

highlighting sustained investment-led activity during the year. 10

The government maintained a high level of infrastructure spending, with a capital investment outlay of Rs. 11.21 lakh crore in FY 2025-26, equivalent to about 3.1% of GDP. The trajectory of public investment remains strong, with an increase to ^12.20 lakh crore in the Union Budget 2026-27. Institutional mechanisms and financing platforms have also expanded, enabling the mobilisation of both domestic and global capital for long-term infrastructure development. 11

Large-scale project execution continues to define the sector. In FY 2025-26, about 1,941 infrastructure projects, with a total revised cost of ^41.50 lakh crore, were under implementation across central ministries, with nearly 48% of the total cost already incurred. Transport and logistics account for the majority of these projects, reflecting the focus on improving connectivity through roads, railways, ports and urban transit systems. The energy sector and urban infrastructure also continue to attract significant investments, supporting industrial activity and urban expansion.12

The Indian infrastructure and highway sector has a very strong growth outlook, backed by increased government funding and a clear focus on major road development projects. Increased spending, including Rs. 3.09 lakh crore for MoRTH and Rs. 1.87 lakh crore for NHAI, highlights the governments long-term commitment to expanding highways, building new greenfield expressways, and developing futuristic initiatives such as Hydrogen Highways. With NHAI planning to award 52 new projects worth around Rs. 1.15 trillion, alongside rural road upgrades under PMGSY Phase-3 and Phase-4, project execution and bidding activity across HAM and EPC models will remain

high. This momentum provides strong revenue visibility and long-term stability for construction companies in the sector.

In aviation, the UDAN (Ude Desh ka Aam Naagrik) scheme was strengthened through a modified version approved in FY 2025-26, with an outlay of Rs. 28,840 crore. The scheme targets additional airports and enhanced regional connectivity, particularly in Tier II and Tier III cities.

Overall, these developments indicate steady progress in infrastructure creation, supported by strong programme execution and policy measures aimed at improving financing access and regional development.

Road and Highway Infrastructure of India

Indias road and highway sector continues to play a critical role in improving connectivity, logistics efficiency and regional development. The national highway network has expanded significantly, reaching about 1,46,572 km. This growth has been supported by a strong focus on high-speed corridors and multi-lane highways. The length of access-controlled expressways has also increased sharply, indicating a shift towards faster and more efficient transport infrastructure.

In FY 2025-26, the sector recorded steady progress in both execution and investment. The National Highways Authority of India (NHAI) constructed about 5,313 km of highways during the year, exceeding its target by around 15%. Capital expenditure stood at Rs. 2.44 lakh crore. 14 Government initiatives such as Bharatmala Pariyojana continue to support the development of economic corridors and expressways, with over 21,000 km already constructed under the programme.

Government initiatives targeting access- controlled highways and rural road infrastructure, such as PMGSY Phase III (over 1,01,600 km constructed in FY 2025-26), continue to improve freight logistics and reduce travel times. Looking ahead, the road sector is positioned to maintain strong momentum, backed by sustained capital allocation and an annual construction target of approximately 10,000 km for national highways. Sector growth will be further anchored by MoRTHs planned PPP pipeline of 13,400 km valued at Rs. 8.30 Trillion over the next three years, ensuring strong project visibility and long-term network expansion.

1,46,572 km

Total National Highway Network Length (As of March, 2026)

Railway and Metro Infrastructure of India15

Indian Railways continues to play a central role in Indias transport and logistics ecosystem, facilitating large- scale movement of both passengers and freight. In FY 2025-26, freight loading exceeded 1,670 Million tonnes, reflecting steady growth.16 Capacity augmentation was supported by Dedicated Freight Corridors, which handled over 400 trains daily, improving turnaround time and asset utilisation. Policy initiatives such as Gati Shakti Cargo Terminals, with over 300 approved and more than 100 commissioned, along with the execution of 40+ projects involving investments exceeding ^25,000 crore, have supported network expansion and decongestion of high-density routes. As per the Union Budget 2026-27, internal revenue is estimated at Rs. 3.02 lakh crore, reflecting growth of 8.4%. Freight contributing around 62%, while passenger services account for approximately 29%. Capital expenditure is estimated at Rs. 2.93 lakh crore, making an increase of 10.5%,

driven by investments in network expansion, rolling stock and station redevelopment. This underscores the sectors continued capital-intensive growth approach.17

Infrastructure development remained robust, with over 900 km of new railway lines commissioned in 2025, along with track renewal and deployment of advanced maintenance systems. Sectional speeds increased to 130 kmph on key routes, with select corridors supporting speeds of up to 160 kmph. Electrification reached around 99%, indicating a near-complete transition to electric traction. The railway sector is undergoing a major transformation through increased electrification, advanced signalling systems and safety upgrades aimed at enhancing speed and reliability. More than 45,000 km of rail routes have already been electrified, while the Government is targeting 100% network electrification by 2030.

Passenger services expanded with Vande Bharat, Amrit Bharat and Namo Bharat trains, alongside more than 43,000+ special train trips to address seasonal demand. Rolling stock modernisation included the production of over 4,200 LHB coaches, enhancing safety and operational efficiency.18

Freight operations remain largely concentrated in bulk commodities such as coal, though diversification and containerised movement are gradually increasing. The expansion of Dedicated Freight Corridors has improved efficiency through higher speeds and reduced transit time. Integration with logistics infrastructure, along with initiatives such as PM Gati Shakti and the National Logistics Policy, has

reduced logistics costs to 7.97% of GDP and improved supply chain efficiency.19

Technology adoption, including digital monitoring, predictive maintenance and systems such as Kavach, is strengthening safety and operational efficiency. Despite these developments, structural challenges persist. The operating ratio is estimated at around 98.4%, with a significant portion of expenditure towards salaries, pensions and lease obligations. This limits internal resource generation and necessitates continued budgetary support.

The sector is targeting freight loading of 3,000 Million tonnes by 2029-30, supported by sustained investments in Dedicated Freight Corridors, cargo terminals and capacity expansion. Future growth in rail infrastructure will be driven by the development of 4,000 km of high-speed corridors, additional freight lines, station redevelopments, and tighter integration with ports, industrial clusters, and logistics hubs. Meanwhile, urban mobility has transformed as Indias metro network expanded from 248 km in 2014 to over 1,090 km across 26 cities by 2025, significantly easing city congestion. Momentum continued in FY 2025-26 with ^25,932 crore sanctioned for 84.57 km of new metro projects, backed by an increased metro budget of around ^29,550 crore to support ongoing network growth and upgrades. The expansion of metro networks across major cities is expected to promote public transport, reduce pollution and ease pressure on road traffic. Together, railway modernisation and metro expansion are forming the backbone of a sustainable, technology- driven transport ecosystem that supports Indias goal of becoming a developed nation by 2047.

Renewable Energy and BESS Sector of India

Indias renewable energy sector continues to expand, driven by policy support and sustained capacity addition. As of 2026, total non-fossil fuel capacity reached about 283 GW, with renewables accounting for a significant share. In FY 2025-26, a record 50.90528 GW of renewable capacity was added, including 44.61425 GW solar and 6.05702 GW wind, reflecting strong growth momentum 20

Solar energy remains the largest contributor, with installed capacity exceeding 150.26 GW. Wind capacity surpassed 56.09 GW, supported by a record annual addition of 6.05 GW in FY 2025-26. The sector continues to benefit from government initiatives such as PM- KUSUM and rooftop solar programmes, alongside a large pipeline of projects under implementation and planning21

The Battery Energy Storage System (BESS) segment is gaining prominence in addressing intermittency and enhancing grid stability. BESS is increasingly being integrated with renewable energy projects to enable round-the-clock power supply, manage peak demand and improve grid stability. In FY 202526, the segment witnessed strong policy and execution momentum, supported by viability gap funding, regulatory

recognition and growing integration with renewable assets.

As of2026, about 10.6 GW / 28.7 GWh of BESS capacity is under construction, with an additional 22.3 GW / 69.8 GWh under tendering, indicating a substantial and expanding project pipeline. Government support has accelerated deployment through viability gap funding schemes, witRs. 13.22 GWh of BESS capacity under implementation backed by Rs. 3,760 crore. Additionally, a new scheme approved in FY 2025-26 targets 30 GWh capacity with Rs. 5,400 crore in support. 22

Going forward, demand for energy storage is expected to increase significantly. Estimates indicate a requirement of around 208 GWh of BESS capacity by 2030, driven by rising renewable energy penetration and the need for grid balancing solutions. 23

^1,000 Crore

Viability Gap Funding for BESS in Union Budget FY 2026-27

^1,09,029 Crore

Allocated to Energy Sector in Union Budget FY 2026-27

Water and Irrigation

The water and irrigation sector continues to gain momentum, supported by a strong focus on expanding access to clean water, improving sanitation and strengthening irrigation infrastructure. The Ministry of Jal Shakti leads key initiatives such as Jal Jeevan Mission (JJM), Swachh Bharat Mission (SBM-G) and Atal Mission for Rejuvenation and Urban Transformation (AMRUT 2.0).

As of 2026, over 15.80 crore rural households (around 81-82%) have been provided tap water connections under JJM. The programme has been extended under JJM 2.0 until 2028, with an enhanced outlay of Rs. 8.69 lakh crore, shifting focus towards sustainable service delivery and long-term water management. 24

Urban water infrastructure is being strengthened under AMRUT 2.0, with over 3,500 water supply projects worth Rs. 1.18 lakh crore approved. These initiatives are improving treatment capacity and strengthening water supply systems.

Irrigation development is being driven through the Pradhan Mantri Krishi Sinchayee Yojana (PMKSY), which focuses on expanding irrigation coverage, enhancing water use efficiency and modernising distribution systems. In parallel, programmes such as Jal Shakti Abhiyan (Catch the Rain) and large-scale river interlinking projects, including the Ken-Betwa project, continue to support integrated water resource management.

These initiatives are increasingly supported through modern technologies such as micro-irrigation, pressurised systems and digital monitoring frameworks, including Jal Seva Aankalan, improving efficiency and sustainability. Implementation through Public-Private Partnership (PPP) and Engineering Procurement Contract (EPC) models is enhancing execution efficiency, optimising fund utilisation and strengthening longterm water security. These efforts are contributing to agricultural resilience and sustainable development.

Rs. 67,670 Crore

Allocated for Jal Jeevan Mission (JJM) in FY 2026-27 Union Budget

Ken-Betwa Project25

The Ken-Betwa Link Project is Indias first major river-interlinking initiative under the National Perspective Plan. It aims to transfer surplus water from the Ken River in Madhya Pradesh to the Betwa basin in Uttar Pradesh, primarily to irrigate the drought-prone Bundelkhand region.

Rs. 45,600 Crore

Allocation for the Ken Betwa Link Project

Rs. 8,000 Crore

Allocated for Amrut 2.0

Rs. 5,266 Crore

Allocated for River Interlinking and Irrigation in FY 2026-27

Urban Infrastructure

The urban infrastructure sector continues to witness steady progress, supported by sustained investments and policy initiatives led by the Ministry of Housing and Urban Affairs. The government remains focused on affordable housing, urban transport and strengthening essential services such as water supply, sanitation and waste management.

Flagship programmes, including Pradhan Mantri Awas Yojana - Urban (PMAY-U and PMAY-U 2.0), AMRUT 2.0 and the Smart Cities Mission, are driving improvements in urban living standards and service delivery. As of FY 2025-26, over 1.22 crore houses have been sanctioned under PMAY-U, with a significant proportion already completed. PMAY-U 2.0 aims to provide housing for an additional 1 crore urban households in the coming years.26 These initiatives, along with efforts to strengthen urban

local bodies and financing mechanisms, are expected to support sustainable and resilient urban development.

Airport Infrastructure

Indias aviation sector is entering a new era of expansion. With passenger traffic rising, cargo movement intensifying, and regional connectivity becoming a national priority, several ambitious airport projects are underway across the country . For every rupee spent, the sector generates more than three times that value in economic activity and supports over six times as many jobs in connected industries. Under the broader infrastructure pipeline, multiple airport and terminal projects have been undertaken. During 2025, several facilities were inaugurated across cities such as Patna, Datia, Satna, Amravati, Tuticorin and Purnea, enhancing regional connectivity and supporting economic activity. 27

Major greenfield projects, including Noida International Airport (Jewar) and Navi Mumbai International Airport, have progressed significantly. Navi Mumbai airport commenced operations in late 2025, while Noida airport is nearing operational readiness in 2026. These projects are expected to ease congestion at major hubs and significantly enhance passenger and cargo handling capacity. 28

Regional connectivity continues to improve under the UDAN scheme, expanding access to air travel in underserved Tier II and Tier III cities. The sector is also supported by a long-term vision to develop over 400 airports by 2047, alongside ongoing upgrades in terminal infrastructure and operational efficiency.29

Despite challenges related to regulatory requirements and execution timelines, the overall outlook remains positive. Continued investments and

infrastructure upgrades are expected to support economic growth, generate employment and strengthen Indias position as a global aviation hub.

Power Transmission and Distribution (T&D) Sector

The global power transmission and distribution (T&D) market is estimated at USD 358-398 Billion in CY 2025, providing a strong base for sustained growth. The sector is expected to expand at a CAGR of around 4%, driven by rising electricity demand, renewable energy integration and grid modernisation. 30

Growth is supported by increasing electrification across transport and industry, as well as large-scale renewable capacity additions. This is reflected across key equipment segments, including switchgear (USD 131.60 Billion in 2025) and power transformers (USD 24.80 Billion in 2025), indicating strong demand for core grid components. 31

Investment activity is focused on strengthening transmission corridors, expanding grid capacity and modernising ageing infrastructure. The growing deployment of renewable energy, electric vehicle charging infrastructure and digital grid technologies is driving demand for advanced transmission systems, substations and automation solutions.

Regionally, Asia-Pacific continues to dominate global demand, supported by large-scale infrastructure investments and renewable capacity additions. In contrast, North America and Europe are primarily focused on grid modernisation and the replacement of ageing infrastructure. 32

Indias power transmission and distribution sector in FY 2025-26 reflects continued expansion, supported by rising electricity demand, robust

infrastructure development and improved system performance. The country recorded a peak demand of 242.49 GW, while energy shortages remained minimal at 0.03%, indicating a near-balanced demand-supply scenario and enhanced grid reliability.

The national transmission network has surpassed a significant milestone, exceeding 5 lakh circuit kilometres (ckm) of transmission lines (220 kV and above), along witRs. 1,407 GVA of transformation capacity. This positions India among the largest synchronous grids globally. Indias ‘One Nation—One Grid—One Frequency framework has unified all regional grids, enabling 1,12,250 MW of interregional power transfer and facilitating stable and reliable electricity supply across the country.

Over the past 12 years, India significantly expanded its power grid by adding 2,08,743 ckm of transmission lines and 8,76,445 MVA of transformation capacity to support a total installed generation capacity of 513.7 GW as of December 2025. Driven by increasing renewable energy integration, the policy and investment outlook remains strong, with national planning targeting the addition of 1,91,474 km of transmission lines and 1,274 GVA of transformation capacity by 2031-32. The Government envisions a robust, modern and green power grid to meet rising energy requirements, supported by major investments in high- capacity transmission lines, advanced substations and High-Voltage Direct Current systems over the next decade. Strengthened interregional connectivity and greater adoption of smart-grid technologies are expected to facilitate renewable energy integration, improve grid reliability and support the transition towards a low-carbon economy. Further, the Draft National Electricity Policy

2026 emphasises expanding intra-state networks, integrating energy storage, and building grid flexibility to handle rising power demand and variable clean energy efficiently.

Tunnel Sector

Indias tunnelling sector has entered a technology-intensive era, evolving into a significant driver of national logistics, strategic defence, and urban mobility. Throughout FY 2025-26, the sector demonstrated high execution momentum across complex geographies, transitioning firmly from conventional excavation to advanced methods. Landmark completed assets such as the 9.02-km Atal Tunnel (recognised as the worlds longest highway tunnel above 10,000 feet), the 9-km Dr. Syama Prasad Mookerjee Tunnel, and the twin-tube Sela Tunnel highlight the widespread adoption of Tunnel Boring Machines (TBMs). Beyond structural excavation, the sector prioritises operational resilience through Integrated

Tunnel Control Systems (ITCS) and SCADA-based monitoring platforms, integrating automated ventilation, CCTV surveillance, public address systems, and real-time fire detection to ensure safe, year-round civilian and military movement.

Indias tunnelling sector is shifting from raw civil excavation towards operational intelligence, localized supply chain resilience, and long-term lifecycle performance. As mega-structures like the 14-km ZojilaTunnel and the Thane Creek undersea bullet train section transition from structural breakthroughs to system integration, the focus is pivoting to SCADA-driven digital twins, automated environmental controls, and predictive emergency architectures. To lock in cost efficiencies, building on savings exceeding Rs. 5,000 crore achieved through modern NATM and TBM techniques, the industry is actively indigenizing electro-mechanical equipment and rock- support engineering under national manufacturing mandates.33

Government Initiatives

Bharatmala Pariyojana

Bharatmala Pariyojana remain a

cornerstone highway development

programme aimed at enhancing

connectivity and improving logistics efficiency across the country. As of FY 2025-26, projects covering 26,425 km have been awarded, of which over 21,248 km have been constructed.34 The programme is supporting the development of economic corridors

and expressways, strengthening freight movement and regional connectivity.

During FY 2025-26, the focus remained on expanding access-controlled expressways and economic corridors. Nearly 10,000 km of expressways are currently under development across 27 projects, with an estimated investment exceeding Rs. 4 lakh crore. These projects are creating significant opportunities in high-speed corridor construction, EPC execution and hybrid annuity models.

Rising Public Capital Expenditure

Government capital expenditure has increased sharply from Rs. 2 lakh crore in FY 2014-15 to ^12.20 lakh crore (BE) in FY 2026-27. This sustained increase is driving infrastructure creation, job generation and demand across sectors such as steel, cement and construction.

Digital Infrastructure and Data Economy

Rapid growth in digital services is driving demand for infrastructure such as data centres, with the sector expected to reach $8 Billion by 2026. This growth is backed by rising data consumption and cloud adoption.

Expansion of Tier II and Tier III Cities

Policy emphasis on developing cities with populations above 5 lakh, along with the creation ofCity Economic Regions (CERs), is driving infrastructure demand beyond areas. This is leading to the emergence of new growth hubs and expanding project opportunities across regions.

Stable Macroeconomic Environment

Indias GDP growth is expected to remain in the range of 6.5-7%. Easing inflation is supporting demand for infrastructure services, including roads, urban transport and logistics.

Infrastructure Financing Reforms

New instruments such as the Infrastructure Risk Guarantee Fund, along with institutions such as NIIF and NaBFID, are improving access to long-term capital and reducing project risk. This is enabling faster execution and higher private sector participation.

Grid Expansion Driven by Rising Power Demand

Indias rising electricity demand and capacity addition are driving large-scale expansion in transmission infrastructure. The network is expected to grow from approximately 5 lakh ckm in 2026 to 6.48 lakh ckm by 2032, supported by a strong capex pipeline. This is enabling faster execution and higher private sector participation.40

National Rail Plan Vision 2030

The National Rail Plan continues to guide long-term railway capacity expansion, with a focus on complete electrification, network expansion and the development of dedicated freight corridors. Key initiatives include increasing speeds to 130-160 kmph on major routes, expanding freight corridors and undertaking capacity augmentation projects. These efforts are aimed at meeting demand up to 2050, while reducing congestion on high-density routes and improving operational efficiency.

PM Gati Shakti National Master Plan

PM Gati Shakti continues to drive integrated infrastructure planning across sectors. As of FY 2025-26, 352 infrastructure projects worth ^16.10 lakh crore have been evaluated, witRs. 201 projects sanctioned and 167 under implementation. 35

The platform has onboarded 44 central ministries and 36 states/UTs, significantly improving inter-agency coordination and accelerating project execution36. Additionally, Rs. 5,000 crore has been extended to states as interest-

free loans for infrastructure development, enhancing funding availability and execution speed.

National Infrastructure Pipeline (NIP)39

The NIP continues to provide strong project visibility, comprising over 8,600 projects, with a total investment value exceeding USD 2.20 Trillion (Rs. 185+ lakh crore equivalent) across sectors.

Roads, railways and urban infrastructure account for a substantial share of investments, ensuring sustained

order visibility and diversified

Opportunities

Strong Executable Order Book with Revenue Visibility

• The Company maintains an order book of over ^1,01,470.62 Million. This supports stable nearterm execution and reduces dependence on fresh order inflows.

• A significant portion of the order book is under execution, enabling predictable cash flows. Diversification across roads, railways and energy ensures revenue continuity even in the case of segment-specific slowdowns.

• Strong visibility supports efficient resource planning, equipment utilisation and working capital management, supporting operational efficiency.

• The company is exploring opportunities in building construction and the expansion of existing infrastructure, similar to the Narol and Urban Extension Road (UER) projects.

Diversification into Railways, BESS, Energy

Segments & Power T&D

• The share of non-road segments, including railways (27.84%) and renewables/BESS (19.02%) is increasing steadily, reducing dependence on highways.

• Entry into BESS and transmission aligns the Company with high-growth segments linked to Indias energy transition, where long-term demand visibility is strong.

• Project wins in FY 2025-26 across metro, transmission and BESS segments demonstrate effective execution of diversification strategy and strengthen the future order pipeline.

• Expansion into power transmission and distribution aligns with Indias large-scale grid expansion plans, witRs. 1.91 lakh ckm of transmission lines and 1,274 GVA capacity planned by 2032, indicating a strong long-term project pipeline.41

• The sector is expected to witness capital deployment of Rs. 9.16 lakh crore towards transmission infrastructure, driven by renewable integration and rising power demand, creating sustained EPC opportunities for new entrants.42

Asset Monetisation Supporting Capital Recycling

• The monetization proceeds of five HAM assets (/rs 1384 Crore consideration anticipated) is expected to unlock capital and improve liquidity

• This is expected to enable redeployment of capital into new projects without significant balance sheet stress, improving return ratios over time.

• The strategy also reduces exposure to long- gestation assets and supports a more asset-light growth approach in EPC operations.

Strong Bidding Pipeline and Government-Led

Capex

• Sustained government capex in roads, railways and energy continues to provide a strong pipeline of projects, supporting sustained order inflows.

• Participation across EPC, HAM and emerging segments enhances the ability to capture opportunities across multiple infrastructure verticals.

Working Capital Intensity and Cash Flow

Management

• The business remains working capital intensive, with elevated receivables, unbilled revenues and delays in debt disbursement, particularly in HAM and renewable projects.

• Gross current asset days have increased, indicating pressure on cash conversion cycles.

• While monetisation and project completions are expected to improve liquidity, efficient working capital management remains critical to sustain growth.

Execution Delays and Dependence on External

Factors

• Project execution is impacted by delays in appointed dates, land acquisition and regulatory approvals, affecting revenue recognition.

• Delays also increase costs due to extended timelines and resource underutilisation.

Rising Leverage and Equity Commitments in

Growth Segments

• Expansion into HAM, solar and BESS projects involves significant equity commitments (Rs. 1,180 crore pipeline), increasing funding requirements.

• Debt levels have risen due to funding needs and timing mismatches in cash inflows, although expected to moderate post monetisation and disbursements.

• Sustaining growth while maintaining balance sheet discipline remains a key priority.

Margin Pressure and Competitive Intensity

• Increased competition in EPC bidding has led to tighter margins, with industry margins estimated at around 14-15%.

• Volatility in input costs, including bitumen and construction materials, continues to impact profitability.

• One-time provisions and change-in-law impacts in FY 2025-26 further highlight margin sensitivity to project-level risks.

execution opportunities across infrastructure segments.

Overall, these initiatives are strengthening the execution environment by ensuring a large and visible project pipeline, improved funding support and faster approvals. This is supporting sustained growth across infrastructure construction and EPC segments.

Company Overview

Incorporated in 2003, H.G. Infra Engineering Limited (HGIEL) has evolved into a well-established infrastructure company in India, with a strong track record in executing large- scale projects. The Company has built its presence through consistent delivery

and a disciplined execution approach, positioning itself as a reliable partner in infrastructure development.

HGIEL provides integrated engineering, procurement and construction (EPC) services and undertakes projects under the Hybrid Annuity Model (HAM). Its operations span multiple infrastructure segments, including transportation, renewable energy and emerging areas such as battery energy storage systems (BESS) and power transmission. This enables a diversified and resilient project portfolio.

The Company has also entered the power transmission and distribution (T&D) segment, securing its first

interstate transmission project under the Eastern Region Generation Scheme. This marks a strategic expansion into grid infrastructure and strengthens its presence across the energy value chain.

Operations are supported by a strong execution-driven model, backed by inhouse capabilities, a modern equipment base and a skilled workforce. This enables efficient project management across all stages while maintaining quality and timely delivery.

HGIEL continues to adopt advanced construction practices and engineering solutions, further enhancing execution efficiency and strengthening its competitive positioning in the infrastructure sector.

Operational Performance

The Company delivered steady operational performance during FY 2025-26, supported by strong execution across its diversified project portfolio. As of FY2025-26, the total order book stood at approximately Rs. 1,01,471 Million, providing healthy revenue visibility and supporting sustained execution momentum across key segments.

The order book remains well diversified across sectors and geographies. Roads and highways continue to constitute the largest share, while railways, metro and emerging segments such as BESS and solar are contributing an increasing proportion. Roads account for a dominant share of the order book, followed by railways and BESS, reflecting a gradual shift towards diversified infrastructure segments.

The Company has also established a strong presence across multiple states, reducing geographic concentration risk and enabling broader opportunity capture. In addition, several projects across roads and HAM segments have reached advanced stages of completion, improving execution visibility and supporting near-term cash flow generation.

From a category perspective, the order book mix is evolving, with increasing contribution from railways and energy- related segments, driven by recent project wins in BESS, metro and transmission. This diversification is expected to support balanced growth and reduce dependence on any single segment over the medium term.

Overall, the Companys operational performance reflects its strong execution capabilities, diversified order book and continued expansion into emerging infrastructure segments, providing a stable foundation for future growth.

Outlook

HGIEL is expected to deliver steady growth over the medium term, supported by a diversified order book of around ^1,01,470.62 Million, providing strong multi-year revenue visibility. Growth is likely to be driven by sustained order inflows and conversion of its bidding pipeline across highways, railways and emerging infrastructure segments. Continued traction in government-led projects is expected to further strengthen execution visibility.

The order book mix is gradually evolving, with increasing contribution from non-road segments, thereby reducing dependence on highways over time.

The Company continues to focus on diversification, with a strategy to increase the share of non-road segments over the medium term. These include railways, renewable energy and power transmission and distribution (T&D), where significant investments in grid expansion and renewable integration are expected to create a strong opportunity pipeline. Entry into transmission projects and participation in EPC and asset-based opportunities are likely to support long-term diversification and improve the overall revenue mix. This shift is expected to improve margin stability and provide access to high- growth infrastructure segments.

The Company is also progressing with monetisation of HAM assets, which is expected to enhance liquidity, support capital recycling and reduce leverage over the medium term. Going forward, HGIELs performance will be driven by the timely execution of the existing order book, the successful conversion of the bidding pipeline into new orders and continued diversification across infrastructure segments. At the same time, effective management of working capital, execution timelines and leverage will remain critical to sustaining growth.

Credit Ratings

As per the latest rating rationale published by ICRA Limited, HG Infra Engineering Limiteds credit ratings have been reaffirmed at [ICRA]AA- (Positive) for long-term facilities and [ICRA]A1+ for short-term facilities. The reaffirmation reflects the Companys strong order book visibility, healthy financial profile and expectation of sustained credit strength over the medium term. 43

Key Ratios

S. Particulars No.	FY 2025-26	FY 2024-25
1. Debt-equity ratio	0.50	0.37
2. Return on equity (%)	13%	22%
3. Book value per share (Rs. )	500.05	442.65
4. Earnings per share (Rs. )	59.71	88.55
5. Debtors turnover ratio	3.65	5.28
6. Inventory turnover ratio	4.64	6.39
7. Interest service coverage ratio	4.06	7.09
8. Current ratio	1.20	1.40
9. Operating Margin (%)	12.94	15.71%
10. Net profit ratio (%)	6.87%	9.54%

Details of significant changes (i.e. change of 25% or more as compared to the immediately previous Financial Year) in key financial ratios

• The net debt to equity ratio for the current year increased on account of availment of short term borrowings for payments to vendors (including related parties).

• The return on equity ratio has declined as a direct affect of overall operational profitability of the Company.

• The debtors turnover ratio has declined on account of higher

closing A/R for customers and lower revenue during the year.

• The inventory turnover ratio has declined on account of lower COGS during the year, however the average inventory has not changed significantly.

• The net profit ratio has declined as a direct affect of overall operational profitability of the Company.

Human Resources

The Company continues to strengthen its human capital by aligning talent strategies with evolving business

requirements. With a workforce of over 4,700 employees as of 31st March 2026, it supports efficient execution across diversified infrastructure projects.

Key initiatives include structured talent acquisition, targeted training programmes, cross-functional skill development and leadership grooming through formal platforms. These initiatives are designed to enhance technical and managerial capabilities across the organisation.

Career development programmes and training interventions focus on building adaptability, accountability and problem-solving capabilities, supporting a high-performance work culture.

Enterprise Risk Management

Risk management remained an integral part of the Companys governance and business strategy, supported by a strengthened Enterprise Risk Management (ERM) framework designed to identify, assess and mitigate strategic, operational, financial and compliance-related risks. The framework was embedded across business functions to enable a holistic and responsive approach aligned with the Companys long-term objectives. During the year, the Company undertook periodic risk assessments, enhanced internal control systems, implemented scenario- based planning exercises and leveraged digital tools to monitor emerging risks. Particular focus was placed on areas such as cybersecurity, regulatory compliance and ESG-related risks, with mitigation strategies integrated into decisionmaking processes across the organisation.

Internal Control Systems and their Adequacy

The Company has established a well- structured internal audit system that supports efficient operations, regulatory compliance and asset protection. The audit committee diligently reviews internal audit reports, takes corrective

action as required and maintains open communication with both statutory and internal auditors to ensure the effectiveness of internal control systems. This incredible internal audit framework ensures that the Company operates with integrity, transparency and accountability while mitigating risks and safeguarding the interests of stakeholders.

Cautionary Statement

This statement made in this section describes the Companys objectives, projections, expectations and estimations, which may be ‘forward-looking statements within the meaning of applicable securities laws and regulations. Forward-looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realised by the Company. Actual results could differ materially from those expressed in the statement or implied due to the influence of external factors which are beyond the control of the Company. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements based on any subsequent developments.