Buy HG Infra Engineering; target of Rs 1440: Geojit Financial Services

Geojit Financial Services research report on HG Infra Engineering

HG Infra Engineering Ltd. (HG Infra) is one of the emerging EPC players in India, with over two decades of rich experience in road construction. It is primarily engaged in roads and allied sectors like flyovers, bridges, and irrigation. In Q3FY25, the order book grew by 57% YoY to Rs15,080cr, led by strong order inflow of Rs8,200cr in 9MFY25. The diversified order book (2.6x TTM revenue) provides a healthy revenue visibility for the coming years. During the quarter, the topline grew by 12% YoY driven by higher execution in road, solar and railway projects. With the progress in execution, we expect revenue to grow at a CAGR of 17% over FY24-FY27E. The company has guided for an order inflow target of Rs 10,000cr to Rs 12,000cr for FY26 with a revenue growth of 16-17%. EBITDA margin improved by 65bps YoY to 16.6% owing to strong execution and cost control measures. The management expects the margins to be in the range of 15-16% for FY25/FY26. The company is optimistic about the upcoming project pipeline, despite recent slowdown in awarding new contracts.

Outlook

Therefore, we reiterate our BUY rating on the stock & value standalone businesses at a P/E of 12x FY27E EPS and HAM projects at 0.3x P/BV with a TP of Rs.1,440.