Anand Rathi 's research report on H G Infra Engineering
Despite being subject to the covid disruption, H G Infra’s Q4 revenue performance was comforting. Coupled with strong inflows augmenting the backlog, the company seems to have delivered on two key fronts. Slow-reduction in debt and high working capital remain key monitorables, but management expects these to be addressed in FY21. With a large chunk of its order backlog yet-to-get moving, the company not only has enough to fuel an execution ramp-up but is also insulated from any short-term awarding lull. Healthy execution capabilities, scope for a further execution ramp-up and a de-leveraging roadmap lead us to retain our Buy rating.
Adjusting for the pandemic impact, FY21e earnings are ~36% lower (~15% for FY22). Our sum-of-parts-based TP is revised from `404 to `311, derived using 8x FY22 construction EPS and investments at 0.8x of invested value. At the CMP, the stock (excl. investments) trades at 5.2x FY22e EPS.
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