Buy H.G Infra Engineering; target of Rs 1791: Geojit Financial Services

Geojit Financial Services research report on H.G Infra Engineering

HG Infra Engineering Ltd. (HG Infra) is one of the emerging EPC players in India, with over two decades of rich experience in road construction. It is primarily engaged in roads and allied sectors like flyovers, bridges, and irrigation. In Q2FY25, HG Infra registered a better-than-estimated revenue growth of 22% YoY, led by superior execution of projects. In H1FY25 the company received an order inflow of Rs 6,280cr (214% YoY), and the led order book grew by 56% YoY to Rs 16,985cr (~3x TTM revenue), providing revenue visibility for the next 2 to 3 years. EBITDA margin improved by 50bps YoY to 16.4% owing to strong execution and cost control measures. The company maintains an order inflow of Rs 11,000cr to Rs 12,000cr in FY25, and we expect the order book to grow at a CAGR of 31% over FY24-FY27E. The order inflow pipeline remains healthy, and HG Infra expects traction in highways, railways, water, and solar orders in FY25.

Outlook

Therefore we revise our rating to BUY & value standalone businesses at a P/E of 14x FY27E EPS and HAM projects at 0.9x P/BV with a TP of Rs.1,791.