Buy H.G. Infra Engineering; target of Rs 375: Reliance Securities

Reliance Securities's research report on H.G. Infra Engineering

H.G. Infra Engineering (HGI), a newly listed company, is primarily engaged in EPC, civil construction works and related infrastructure projects on item rate and lump sum basis. Roads & Highways segment – which is HGI’s key area of operation – forms a dominant portion of its total order book. While current order book of Rs50.6bn (4.8x FY17 revenue) provides robust growth visibility, HGI is expected to add big chunk of orders to its kitty, led by improvement in financial prequalification and enormous opportunity in Roads & Highway segment.

Outlook

While HGI did not provide any listing gain to its subscribers, we believe current valuations at 17.3x / 12.9x EPS of FY19E / FY20E, respectively, look attractive considering less than 1x PEG ratio and strong return ratios. Hence, we initiate our coverage on the stock with BUY recommendation and one-year Target Price of Rs375 (16x FY20 EPS). For all recommendations report, click here

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