Anand Rathi's research report on HG Infra Engineering
HG Infra’s revenue grew 8.4% y/y to ~Rs11.5bn in Q2, led by higher execution albeit partially impacted by prolonged monsoon. EBITDA margin fell to 12.7% from 16.4% in Q2 FY25, due to one-time provisioning. Execution was normal in H1, as 3 orders (~Rs22.4bn) received appointed date (AD) in the latter part of Q2 and ~2/5th of OB still awaits AD. Debt soared to ~Rs16.3bn, mainly due to advances to suppliers. Management expects execution to pick up in H2, as recently added orders enter execution with margin at historical level of 15-16%. Leverage is likely to normalise led by disbursement from solar SPVs. Proceeds from monetisation of five HAM in Q4 FY26 would strengthen its BS.
Outlook
Marginally tweaking our FY26/27/28e revenue estimates, we maintain BUY rating on the stock with a downwardly revised SOTPbased 12-mth TP of ~Rs1,142 (from Rs1,339 earlier), valuing its core EPC business at 8x Sep’27e EPS.
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