Buy HG Infra Engineering; target of Rs 820: Emkay Global Financial

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26 Aug, 2025 12:21

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Emkay Global Financial's report on HG Infra Engineering

Our recent interaction with HG Infra’s management has quite positively refined our outlook on the business, built upon strong execution in H1FY22 (sales/EBITDA growth of ~29/33% 2-year CAGR) and an order backlog of Rs90.7bn (~2.7x OB/sales TTM), as of Nov’21. Management, led by healthy delivery, recently upgraded its outlook for sales/EBITDA to ~Rs34/5.5bn in FY22 and further order inflows of ~Rs22bn in H2 (vs. Rs38bn reported in H1). In addition, it sees a 20%+ sales CAGR for the next two years as quite achievable. The company has bid for a total project value of Rs228bn (HAM/EPC), of which Railways/Water Supply account for ~18/13%. The HAM monetization announcement is likely in the next 5-6 months, as the company is in discussions with various funds.

Outlook

The impressive performance in the last few quarters has led to ~20% upgrade in FY22/23E EPS by the Street in the last six months, bringing consensus forecasts in line with our optimism. We reiterate Buy and roll forward to Dec’22 to arrive at our revised SOTP-based TP of Rs820 (Rs800 earlier).

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