Hold HG Infra Engineering: target of Rs 920: ICICI Securities

ICICI Securities's research report on HG Infra Engineering

HG Infra (HG) reported a soft Q2FY26, with revenue up 8.4% YoY but short of our expectation due to delayed project starts and slower execution. EBITDA declined 16% YoY to INR 1.5bn, as margins shrank 368bps YoY to 12.7%, impacted by lower operating leverage. APAT fell 24% YoY to INR 673mn. Executable order book (OB) remains constrained, with ~INR 40bn of projects awaiting start. Order inflow (OI) stood at INR 1.5bn in H1 – sharply below our expectation. As a result, book-to bill stands at meagre 2.2x – heightening near-term execution risk. Management has trimmed its FY26 revenue guidance to INR 65bn, from INR 70bn earlier, citing slower ramp-up. Diversification into non-core segments adds incremental execution risk – warranting a cautious stance. We maintain HOLD with an SOTP-based revised TP of INR 920 (prior: INR 1,000).

Outlook

We revise our estimates and maintain HOLD, valuing the EPC business at 7x FY27E EPS, the current deal at 1.8x P/B, and HAM assets at 1.3x P/B to arrive at an SoTP-based revised TP of INR 920 (earlier INR 1,000).