Gayatri Highways has completed the acquisition of a 23% equity stake in HKR Roadways Limited from Kotak Special Situations Fund. The transaction was finalized on August 27, 2026, involving the purchase of 10,67,729 fully paid-up equity shares with a face value of ₹10 each.

The acquisition marks the successful conclusion of the process initiated in February 2026. Gayatri Highways had previously disclosed the proposal to acquire the stake, initially targeting completion by June 30, 2026. An update in June extended the indicative timeline to September 30, 2026. The final closure on August 27 falls within this revised window.

Transaction Details

The deal was executed for cash consideration. The specific cost of acquisition and the price per share were determined at the time of consummating the Securities Purchase Agreement, as per standard regulatory disclosures. The transaction does not constitute a related-party transaction, and the promoters or group companies of Gayatri Highways hold no prior interest in the target entity.

Gayatri Highways confirmed that it obtained the necessary approval from the Roads & Buildings Department, Government of Telangana, for this investment. The company submitted the required details under Schedule III of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, along with the relevant SEBI circular dated January 30, 2026.

Target Company Profile

HKR Roadways Limited operates in the infrastructure sector, specifically managing the four-laning of the Hyderabad-Karimnagar-Ramagundam Road (SH-1) in Andhra Pradesh. The project is structured under a Public-Private Partnership (PPP) model on a Build, Operate, and Transfer (BOT) basis. The entity collects tolls, charges, and fees from users as per its concession agreement with the Andhra Pradesh government.

Incorporated on August 9, 2010, HKR Roadways has shown consistent revenue growth over the past three fiscal years. The financial trajectory highlights the scale of the asset being acquired.

Strategic Rationale

Gayatri Highways stated that the investment aligns with its core business in the infrastructure industry. The company noted that the acquisition would be beneficial for its future growth prospects. By securing a significant minority stake, Gayatri Highways expands its footprint in the toll road segment without taking on the operational execution risks associated with greenfield BOT projects.

What the Numbers Show

The revenue figures for HKR Roadways indicate a steady upward trend in toll collections. Revenue rose from ₹22,539.75 lakh in FY22-23 to ₹26,402.61 lakh in FY24-25. This consistent growth suggests stable traffic volumes on the Hyderabad-Karimnagar-Ramagundam corridor, providing a predictable cash flow stream for the new shareholder. The absence of promoter interest in the target company prior to this deal implies a clean entry for Gayatri Highways into this specific asset.

Gayatri Highways reported a standalone net loss of ₹274.94 lakh for the quarter ended June 30, 2026 (Q1FY27), widening from the ₹239.42 lakh loss recorded in the preceding quarter. Revenue from operations for the period was ₹709.01 lakh, with total income reaching ₹762.47 lakh after including other income of ₹53.46 lakh.

The Board of Directors approved the unaudited standalone and consolidated financial results on August 13, 2026. In a separate development, the company announced the resignation of its statutory auditors, M/s. PRSV & Co. LLP, effective immediately. The audit firm cited increased professional pre-occupation and manpower constraints as reasons for stepping down.

Financial Performance

The company’s operating expenses for the quarter totaled ₹1,036.49 lakh, driven primarily by finance costs and operating & maintenance expenses. Finance costs remained stable at ₹377.33 lakh, identical to the previous quarter’s figure. Operating & maintenance expenses stood at ₹756.68 lakh, while employee benefits expense was minimal at ₹1.26 lakh.

Consolidated results showed a total loss of ₹282.87 lakh for the quarter, compared to a profit of ₹689.94 lakh in Q4FY26. This swing was largely influenced by the share of losses in jointly controlled entities, which contributed a loss of ₹7.75 lakh in Q1FY27, reversing a profit share of ₹929.56 lakh in the prior quarter.

Auditor Qualifications and Resignation

The limited review report issued by PRSV & Co. LLP carried qualifications regarding several material matters. Key concerns included:

• Unconfirmed Balances: The company had not received balance confirmations from Gayatri Projects Limited (GPL) regarding a written-back Zero Interest Subordinate Loan (ZISL). A portion of ₹4,476.51 lakh remains unconfirmed as written off by GPL.
• Defaulted Loans: The company defaulted on a term loan of ₹3,822.65 lakh and accumulated interest of ₹1,193.21 lakh payable to IL&FS Financial Services Limited. Interest recognition has been disputed due to lack of lender confirmation.
• Impairment Issues: The auditors noted that investments in jointly controlled entities Cyberabad Expressways Limited (CEL) and Hyderabad Expressways Limited (HEL) require impairment given their negative or eroded net worths. The company has not yet provided for these impairments in its books.

PRSV & Co. LLP resigned as statutory auditor on August 13, 2026, stating that the decision was not due to an inability to obtain sufficient appropriate audit evidence but rather due to resource constraints.

What the Numbers Show

The financial data reveals a significant dependency on non-operating factors for income stability. In Q1FY27, revenue from operations was ₹709.01 lakh, while other income contributed only ₹53.46 lakh. However, comparing this to the same quarter last year (Q1FY26), other income was a massive ₹3,556.73 lakh against zero operational revenue. This sharp contrast highlights the volatility in the company's income streams, with current operations generating modest revenue against high fixed finance costs, leading to continued operational losses.