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HG Infra - A Beneficiary of strong order inflows

ICICIdirect Research 13 Sep 2024 DISCLAIMER

HG Infra Engineering Ltd is a Jaipur (Rajasthan) based infrastructure company having primary focus on Roads and along with railways and solar sectors. Additionally, the company is actively looking to diversify itself by targeting into water infra segment. It reported 20.6% revenue CAGR over FY19-24 with sustained operating margin driving ~30.3% earnings CAGR over the same period

Strong order book: The orderbook as of Q1 stood ₹15,642 crore (2.9x TTM book to bill). The company expects order inflows of ~₹ 11000-12000 crore in FY25, with 60% inflows likely from Road and remaining being non road segments. During Q1, the company has won orders worth ~₹ 4905 crore and further ₹ 1600+ crore in Q2.

Healthy Revenue and earnings growth: The company has guided for 18-20% revenue growth in FY25 with stable margins of 15-16%. We have baked in ~18% CAGR in topline over FY24-26E to ₹ 7135 crore. Sustained margins at 15.6-16% would ensure, ~22% CAGR in earnings over FY24-26E

Our view: Considering its executable order book position and robust execution, we expect healthy topline and earnings growth over FY24-26. Additionally, strong balance sheet, return ratios and healthy working capital cycle remain key positives ahead.

We value HG at ₹ 1885 on SoTP basis.

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