Shares of have fallen more than 30 per cent from their October 2021 highs, amid broader market weakness, putting the stock in the bear grip. However, brokerages have maintained their bullish stance on this smallcap company and see over 95 per cent upside on the back of strong order book and growth runway.
Dolat Capital noted that HG Infra Engineering won orders worth Rs 2,180 crore and Rs 4,330 crore during FY21 and FY22, respectively. The current order book of Rs 7,970 crore provides visibility for 2.2x TTM revenue, it said.
sees order inflow in the range of Rs 9,000-10,000 crore in FY23 with EBITDA margins in the range of 15.5-16 per cent. It believes the company is well-poised to grow its revenue and profitability moving forward.
Further, the government’s thrust on expanding national highways and taking the overall length of highways over 2 lakh km in the next 5 years is likely to create more opportunities for the company.
“With ongoing development in the entire infra space, a strong and diversified order book position, the company’s execution prowess, asset monetization plan, and a lean balance sheet, we expect it to post revenues, EBITDA, APAT growth of 24%, 26% and 33% CAGR, respectively over FY21-24E,” Axis Securities said.
It has marinated a ‘Buy’ rating on HG Infra as it values EPC business at 9x FY24E EPS and HAM portfolio at 1x book value to arrive at a target price of Rs 850 per share.
“We expect net working capital (excluding cash) days to remain at a comfortable level of 92, 84, 84 days in FY22E, FY23E and FY24E versus 115 and 91 in FY20 and FY21, respectively. We expect revenue, APAT CAGR of 25.7 per cent and 25.8 per cent, respectively over FY22-24E,” analysts at Dolat Capital said.
Despite an increase of 79 per cent year-on-year in stock prices, the brokerage finds
attractive at 6x/4.5x FY23E/ FY24E core construction EPS. It has maintained ‘Buy’ on the stock with a SOTP of Rs 1,139.
Amid bullish views, analysts at
Securities have flagged raw material pressure as a concern and hence cut EPS estimates for FY23E and 24E by 5.1 and 7 per cent to account for the same. That said, its target price of Rs 932 suggests over 60 per cent upside against the previous close.
Emkay Global has also maintained a ‘Buy’ call on HG Infra Engineering with a target price of Rs 820.
The company posted about a 6 per cent decline in consolidated profit after tax to Rs 103.9 crore in the fourth quarter ended March 2022. It had registered a profit after tax of Rs 111 crore a year ago. Total income came in at Rs 1067.26 crore, up 11.14 per cent from the last quarter and up 0.35 per cent from the same quarter last year.
Promoters held a 74.53 per cent stake in the company as of March 31, 2022, while FIIs owned 0.74 per cent and DIIs 14.07 per cent.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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