Buy G R Infraprojects; target of Rs 1630: Motilal Oswal

Motilal Oswal's research report on G R Infraprojects

GRIL reported improved execution in 1QFY23 resulting in 16% YoY/9% QoQ revenue growth (24% above our estimate). EBITDA margin expanded to 19.6% (+345bp YoY), supported by early completion bonus of INR1.3b received during the quarter. EBITDA/PAT grew 41%/58% YoY to INR4.8b/ INR3.2b (ahead of our estimates of INR3.2b/INR1.8b), respectively. Net working capital stood at 77 days at end-1QFY23 (v/s 72 days at end-4QFY22). Input costs have been cooling off and their effect will be more visible in 2HFY23. The order book stood at INR170b (excluding L1). The order pipeline is strong, with the management expecting INR150b of new project wins in FY23. A majority of the new orders (INR120b) is likely from the Roads and Highways segment with the balance coming from Power and Ropeway.

Outlook

We have retained our estimates on execution front and marginally raised our earnings estimates to incorporate the improved margin outlook. With the current order book, we expect GRIL to clock 12% revenue growth over FY22-24, with EBITDA margin being in the 16-18% range. We retain our BUY rating with a revised TP of INR1,630 based on an SoTP valuation.