Buy H.G. Infra Engineering; target of Rs 330: Dolat Capital

Dolat Capital is bullish on H.G. Infra Engineering has recommended buy rating on the stock with a target price of Rs 330 in its research report dated August 18, 2020.

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August 20, 2020 / 14:04 IST

26 Aug, 2025 12:21

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Dolat Capital's research report on H.G. Infra Engineering

HGINFRA reported revenue and PAT below estimates however, EBITDA margins above estimates. HGINFRA posted muted numbers with 43.4%/ 38.2%/ 56.1% YoY degrowth in revenue/ EBITDA/ PAT to Rs3.0 bn/ Rs491 mn/ Rs151 mn in Q1FY21. We broadly maintain our estimates for FY21E/ FY22E despite muted Q1FY21 as we expect execution to pick up significantly from Q3FY21E in projects worth Rs33.4 bn on receiving the appointed date coupled with stabilization of labour and supply chain issues. We expect 7.5%/ 23.0% revenue growth for FY21E/ FY22E. The company’s labour availability has improved from 50-70% to 80-85% strength and expects 100% labour post monsoon.

Outlook

We expect revenue/ Adj. PAT CAGR of 15.0%/ 14.1% over FY20-22E. Though the stock has corrected ~4% since our Q4FY20 result on 26 Jun’20, it still looks attractive at 7.7x/ 5.8x FY21E/ FY22E EPS, hence we maintain BUY with SOTP of Rs330 (8x FY22E EPS) and 1xFY22E P/B for HAM equity investments. We factor Rs2.0 bn/ Rs1.3 bn equity investment in HAM for FY21E/ FY22E.

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