diff --git a/plugins/inventory/terraform_state.py b/plugins/inventory/terraform_state.py
index 2e81f9a6..03196f57 100644
--- a/plugins/inventory/terraform_state.py
+++ b/plugins/inventory/terraform_state.py
@@ -518,6 +518,7 @@ def create_inventory(
         hostnames: Optional[List[Any]],
         compose: Optional[Dict[str, str]],
         keyed_groups: List[Dict[str, Any]],
+        groups: Dict[str, Any],
         strict: bool,
     ) -> None:
         for instance in instances:
@@ -537,6 +538,9 @@ def create_inventory(
                 # Create groups based on variable values and add the corresponding hosts to it
                 self._add_host_to_keyed_groups(keyed_groups, host_vars, name, strict=strict)
 
+                # Create groups based on jinja2 conditionals
+                self._add_host_to_composed_groups(groups, host_vars, name, strict=strict)
+
     def parse(self, inventory, loader, path, cache=False):  # type: ignore  # mypy ignore
         super(InventoryModule, self).parse(inventory, loader, path, cache=cache)
 
@@ -575,5 +579,10 @@ def parse(self, inventory, loader, path, cache=False):  # type: ignore  # mypy i
             providers,
         )
         self.create_inventory(
-            instances, cfg.get("hostnames"), cfg.get("compose"), cfg.get("keyed_groups"), cfg.get("strict")
+            instances,
+            cfg.get("hostnames"),
+            cfg.get("compose"),
+            cfg.get("keyed_groups"),
+            cfg.get("groups"),
+            cfg.get("strict"),
         )
diff --git a/tests/integration/targets/inventory_terraform_state_aws/templates/inventory_with_constructed.yml.j2 b/tests/integration/targets/inventory_terraform_state_aws/templates/inventory_with_constructed.yml.j2
index 9b4b4163..38cf941b 100644
--- a/tests/integration/targets/inventory_terraform_state_aws/templates/inventory_with_constructed.yml.j2
+++ b/tests/integration/targets/inventory_terraform_state_aws/templates/inventory_with_constructed.yml.j2
@@ -6,7 +6,9 @@ backend_config:
   key: ansible/terraform.tfstate
   region: {{ aws_region }}
 keyed_groups:
-- key: instance_state
-  prefix: state
-- prefix: tag
-  key: tags
+  - key: instance_state
+    prefix: state
+  - prefix: tag
+    key: tags
+groups:
+  no_public_ip: public_ip == ""
diff --git a/tests/integration/targets/inventory_terraform_state_aws/test.yml b/tests/integration/targets/inventory_terraform_state_aws/test.yml
index 8ca54827..8e3237ad 100644
--- a/tests/integration/targets/inventory_terraform_state_aws/test.yml
+++ b/tests/integration/targets/inventory_terraform_state_aws/test.yml
@@ -118,6 +118,8 @@
               - default_hostname in groups.tag_Phase_integration
               - "'state_running' in groups"
               - default_hostname in groups.state_running
+              - "'no_public_ip' in groups"
+              - default_hostname in groups.no_public_ip
 
       always:
         - name: Delete temporary file
diff --git a/tests/unit/plugins/inventory/test_terraform_state.py b/tests/unit/plugins/inventory/test_terraform_state.py
index 72101b1f..d000b0c4 100644
--- a/tests/unit/plugins/inventory/test_terraform_state.py
+++ b/tests/unit/plugins/inventory/test_terraform_state.py
@@ -258,6 +258,7 @@ def create_instance(self, name, values):
     def test_create_inventory(self, inventory_plugin, mocker):
         hostnames = MagicMock()
         keyed_groups = MagicMock()
+        groups = MagicMock()
         strict = MagicMock()
         compose = MagicMock()
 
@@ -270,9 +271,10 @@ def test_create_inventory(self, inventory_plugin, mocker):
 
         inventory_plugin._set_composite_vars = MagicMock()
         inventory_plugin._add_host_to_keyed_groups = MagicMock()
+        inventory_plugin._add_host_to_composed_groups = MagicMock()
         inventory_plugin.inventory = self.ansibleInventory()
 
-        inventory_plugin.create_inventory(instances, hostnames, compose, keyed_groups, strict)
+        inventory_plugin.create_inventory(instances, hostnames, compose, keyed_groups, groups, strict)
 
         for name, value in config.items():
             inventory_plugin.inventory.assert_value(name, value)
@@ -289,6 +291,10 @@ def test_create_inventory(self, inventory_plugin, mocker):
             [call(keyed_groups, vars, name, strict=strict) for name, vars in config.items()],
             any_order=True,
         )
+        inventory_plugin._add_host_to_composed_groups.assert_has_calls(
+            [call(groups, vars, name, strict=strict) for name, vars in config.items()],
+            any_order=True,
+        )
 
 
 class TestWriteTerraformConfig:
@@ -428,6 +434,7 @@ def assert_calls(self, config, super_parse_patch, read_config_data_patch):
             config.get("hostnames"),
             config.get("compose"),
             config.get("keyed_groups"),
+            config.get("groups"),
             config.get("strict"),
         )