Buy H G Infra Engineering; target of Rs 1339: Anand Rathi

Anand Rathi's research report on H G Infra Engineering

Beating ARe, HG Infra’s Q1 ~Rs17.1bn revenue (up 13.5% y/y) reflects its strong execution abilities. The dip in the 13.8% EBITDA margins (16.2%, Q1 FY25) is attributed to one-time provisions. YTD orders were diverse (EPC, BESS, T&D). Execution is the key monitorable as ~50% of orders (~Rs73bn of ~Rs147bn) awaits AD or LOA. The ~Rs10.5bn leverage is high but expected to normalize on disbursement from solar SPVs. Proceeds from approved monetisation of five HAM assets in FY26 would fortify the BS. We retain FY26/27e revenues but reduce EBITDA margins ~64/24bps. We introduce FY28e revenue/EBITDA of ~Rs85.4bn/12.3bn.

Outlook

We are retaining our Buy rating with a lower sum-of-parts TP of ~Rs1,339 (earlier Rs1,749), the core EPC business at 9x Sep’27e EPS considering delayed receipt of AD and the foray into uncharted solar, BESS and T&D.