HG Infra - Robust Order Book, Efficient Execution To Drive Growth: Axis Securities

Axis Securities Report

Over the last five years, HG Infra Engineering Ltd.’s revenue/Ebitda/profit after tax has grown at a compound annual growth rate of 18%/19%/27%. We expect the growth momentum to sustain moving ahead as well. We expect HG Infra to post healthy revenue/Ebitda/adjusted profit after tax growth of 16%/14%/19% CAGR respectively over FY24-26E.

This will be driven by the company’s strong order book position, better order intake, diversification into the related sectors as well as the government’s thrust on developing the infrastructure of the country.

The stock is currently trading at an implied PE of 10 times and eight times of its FY25E/FY26E earnings.

We maintain our Buy rating on HG Infra and value its engineering, procurement and construction business at 12.5 times FY26E EPS and hybrid annuity model/solar portfolio at 1.2 times/one time book value to arrive at a target price of Rs 1,800/share. The target price implies an upside of 18% from the current market price.

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