Buy HG Infra Engineering; target of Rs 1130: Emkay Global Financial

Emkay Global Financial's research report on HG Infra Engineering

HG Infra, having demonstrated its execution capabilities in the roads sector with 26%/38% revenue/PAT CAGR (FY19-23), is steadily adopting the diversification strategy — Over FY23, it bagged orders worth Rs15bn in the rail/metro segments, thus opening up larger avenues of growth ahead. HG targets non-roads inflow at 20-25% of the overall inflows, in coming years. Further, it recently entered into a share purchase agreement for four HAM projects at 1.55x P/B which, we believe, will give investors’ confidence on the company’s bidding strategy for HAM projects.

Outlook

Given that HG Infra is expected to bid for more projects during FY24 vs FY23 in both, the roads and rail sectors, and that tendering in the roads sector (Apr-May ’23) is up 25% YoY, its FY24 inflow target of Rs80-90bn looks achievable. We have a BUY with TP of Rs1,130.