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The leading infra-construction company shares price fell up to 2 percent to its intraday low of Rs 920.05 per share from its previous close of Rs 928.60 apiece on Wednesday, despite the company receiving a “Buy ” recommendation from HDFC Securities. 

With a market capitalization of Rs 6,031.91 crore, the shares of H.G. Infra Engineering Ltd closed at Rs 925.55 per share, decreased around 0.33 percent as compared to the previous closing price. 

Looking into H.G. Infra Engineering’s performance, revenue increased by 7 percent from Rs 1,185 crore in Q3 FY23 to Rs 1,365 crore in Q3 FY24. During the same period, net profit decreased by 22 percent, from Rs 131 crore to Rs 102 crore. 

HDFC Securities, one of India’s well-known brokerages, gave a ‘Buy’ call on the Infra stock with a target price of Rs 1,338.00, indicating a potential upside of 44 percent from Thursday’s closing price of Rs 925.55 per share. 

Here’s the reason for the bullish upside target: 

In Q3FY24, HG displayed robust financial performance, with a revenue of INR 13.5 billion (19% YoY, 55% QoQ), surpassing estimates. Notably, EBITDA at INR 2.1 billion (13.2% YoY, 55% QoQ) exceeded expectations, resulting in a margin of 15.9%. The company reported an exceptional gain of INR 1.1 billion. 

As of Dec’23, HG’s Order Book (OB) reached INR 96.3 billion, demonstrating robust diversification. Government/private orders contribute 73/27%, with 51% EPC, 37% HAM, and 12% railway orders. Uttar Pradesh leads geographically, and an INR 50-60 billion order influx is anticipated in FY24. 

In Q3, HG attained the appointed date for the Kanpur Central Railways project, received a completion certificate for the Maharashtra Pckg-7 EPC project, and COD for the Rewali Ateli Mandi HAM project. Anticipates receiving AD for Varanasi-Ranchi-Kolkata Pckg-13 and 10 projects by Q4FY24. 

As of Dec’23, HG’s standalone gross/net debt reduced to Rs 4.7/3.3bn from Rs 6/4.8bn in Sep’23. For HAM projects, a total equity requirement of Rs 13.3bn exists; Rs 6bn is already infused. Planned infusions: Rs 0.7/4.6/2bn in Q4FY24/FY25/26.

As of September 30, 2023, the company’s order book was at Rs 1,06,782 million. In FY2022-23, the company’s gearing was 0.28x due to an increase in term loans to fund a significant investment of Rs 2,874 million. 

The Company is working on adding non-road projects to its project portfolio, and it expects non-road projects to account for 20-25 percent of its order book in the next 2-3 years. 

Written by:- Abhishek Singh

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