28 May , 2022 By : Kanchan Joshi
H G Infra Engineering Ltd (HGINFRA) reported very strong set of numbers for the fourth quarter ending March 2022, beating street estimates on both execution and margins front. The execution momentum was driven by ramp up in operations of its under construction projects, highlighted domestic brokerage and research firm Yes Securities.
The brokerage remains positive on the company given its comfortable order book, strong execution capabilities, comfortable working capital cycle, geographical diversification and its transition into full fledged contractor and focus on asset monetization.
Yes Securities has maintained its Buy rating on the infra stock with a target price of Rs832 per share, implying an upside potential of about 52% from the current stock levels.
“On the back of strong order book, robust bid pipeline and 5 HAM projects expected to receive AD by 1HFY23 leading to entire OB under execution, management expects robust momentum in execution giving a guidance of Rs50 bn/ Rs60 bn for FY23E/24E with EBITDA margins in the range of 15.5 16%," the note stated.
With government focus on infra spending through Bharatmala Paariyojna along with NHAI’s target to construct 200,000km by FY25, management expects healthy ordering activity to continue in the road sector. Given the strong government push, the company expects robust order inflows of Rs90 Rs100 bn in FY23E.
The company also expects to commence construction in all recent projects over next few months and thereby entire OB is to be in execution by mid FY23.
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