Whalesbook
Highway Infrastructure Ltd is set to return the work order for the Katiyara Fee Plaza in Bihar to the National Highway Authority of India (NHAI). The formal handover is scheduled for May 5, 2026. This decision comes swiftly after the work order was executed on April 5, 2026, with the company citing unprofitability as the reason for its withdrawal.
Project Handover Details
Highway Infrastructure Ltd has confirmed it will return the work order for the Katiyara Fee Plaza in Bihar to NHAI. The company stated the project is not profitable and not in its best interest. This follows earlier notifications given on February 27 and March 23, 2026.
Implications of the Exit
This swift exit from a recently secured project suggests problems with assessing profitability or making the project viable. This signals the company is prioritizing its financial health by leaving projects that don't meet profit goals.
Background: Recent Contracts and Financial Woes
The Katiyara Fee Plaza contract itself was relatively new, with the Letter of Acceptance (LOA) issued on February 25, 2026, for ₹156.40 Crore and a 90-day execution period.
Highway Infrastructure Ltd has recently secured other NHAI contracts, including for Kaza Fee Plaza (₹328.77 Cr), Delhi-Vadodara Expressway spur (₹189.7 Cr), and Mundka Fee Plaza (₹64.69 Cr). The company operates in toll collection, EPC infrastructure, and real estate, with a presence across 11 states.
However, the company has faced recent analyst downgrades. In April 2026, MarketsMOJO downgraded its rating from Hold to Sell, citing technical indicators, expensive valuation, and subdued long-term financial trends. These long-term concerns include declining net sales and operating profits over the past five years.
Impact of Leaving the Project
- The company will exit the Katiyara Fee Plaza project in Bihar.
- This move aims to avoid potential financial losses from an unprofitable venture.
- The company's focus will shift to other, potentially more profitable, ongoing projects and its existing order book.
- This reinforces the company's strategy of exiting projects that are not commercially viable.
Key Risks Ahead
- Project Selection and Profitability: The explicit reason for exit suggests potential weaknesses in how projects are evaluated for profit before they are secured, or difficulties in making them profitable during execution.
- Long-Term Financial Trend: The persistent decline in net sales and operating profit over five years, noted by analysts, remains a key concern for future growth.
- Valuation Concerns: Analysts have noted the company's valuation appears expensive compared to its fundamentals and growth prospects.
Industry Peers
- IRB Infrastructure Developers: A major player in road BOT operations and development, with integrated project execution capabilities and NHAI as a client.
- Reliance Infrastructure: Engaged in EPC services for road projects, alongside power and metro rail development.
- Prakash Asphaltings & Toll Highways (India) Ltd (PATH): Active in highway construction and toll operations, with a significant track record.
Key Financial Performance Data
- Net sales declined at an annualised rate of -13.60% (FY20-FY25).
- Operating profit contracted at an annualised rate of -19.26% (FY20-FY25).
- Return on Equity (ROE) was 9.4% (as of April 2026).
What Investors Should Watch
- NHAI's process for re-awarding the Katiyara Fee Plaza contract.
- Company's updates on profitability and performance of other projects in its portfolio.
- Any statements or disclosures regarding the specific reasons for the project's unprofitability.
- Analyst ratings and market sentiment following this exit and previous downgrades.
- Performance of peers in the toll collection and highway development sector.