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Centrum Broking Report
HG Infra Engineering Ltd.'s reported good set of numbers for Q3 FY24 driven by better than expected execution. Company has closed the first tranche (three projects) of its asset monetization for a consideration of Rs 3.7 billion and gain of Rs 1.6 billion (valuation multiple of 1.55 times price/book).
Monetisation is expected to be completed by March 2024 thereby unlocking the much needed growth capital in the near term. National Highways Authority of India tendering is expected to be muted as code of conduct would kick-in by the end of FY24.
However, HG Infra focus to diversify into non-road projects (target of 25%-30% of OB from non-road projects by FY25/FY26) would help to achieve its order inflow target. HG’s robust executable OB coupled with its asset monetization, provides greater comfort for future growth.
We value HG Infra based on SOTP method wherein we have valued engineering, procurement and construction business at 12 time September 2025 profit after tax and asset business as 0.8 times P/B to arrive at our target price of Rs 1,218
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