HG Infra stock gave 56% return in one year; should you invest?
The infrastructure construction company is expected to benefit from the pickup in awarding activity by the MoRTH (Ministry of Road Transport and Highway) and better execution (amid a lower base of the last year) in the September quarter. MoRTH awarded 1,152 km of projects up to August 2024 compared to 95 km in the June quarter, according to an Elara Capital infrastructure sector quarterly preview report. A significant increase is expected in the second half of 2024-25.#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;} The company is expected to report 35.2% revenue growth and 54.4% PAT growth for the September quarter, based on Reuters-Refinitiv consensus estimates. With a diversified presence in infrastructure sectors like roads, railways, metro, and solar, it is also expanding into water sector projects like Namami Gange and Jal Shakti Abhiyan.
The company’s order book stands at Rs.15,642 crore (as of June), ensuring strong revenue visibility. Management projects 18-20% revenue growth for 2024-25 with stable margins of 15-16%, and expects order inflows of Rs.11,000-12,000 crore this year, with 60% from the road segment. It is a beneficiary of the government’s focus on infrastructure development. In the Union Budget 2024-25, Rs.2.78 lakh crore is allocated to MoRTH. Out of this, Rs.1.68 lakh crore is designated for the NHAI for the development of national highways. The company’s extensive experience in the EPC (Engineering, Procurement and Construction) and HAM (Hybrid Annuity Model) will help it to capitalise on the sector’s opportunities.
Looking at the railways and metro segment, the former enjoys a robust outlook driven by factors like the government’s focus on upgrading the network by 2030, emphasis on highspeed rail corridors, electrification and the development of dedicated freight corridors. On the other hand, the metro infrastructure is expanding amid the government’s commitment to enhance urban transportation. The renewable energy sector is also witnessing growth, and the company has successfully secured solar power projects under the KUSUM scheme. It is actively exploring further opportunities in solar power development, including rooftop installations.
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The company is aiming to improve operational efficiency by optimising resource allocation, leveraging data-driven decision-making, maintaining a robust supply chain, digital transformation, and use of modern construction technologies and machinery. Moreover, its robust balance sheet with prudent debt management, strong execution track record, increasing opportunities for collaboration with private entities in infrastructure projects, diversified order book and potential to expand operations beyond India are some of the key strongholds. The stock has significantly outperformed the market benchmark in the last one year with 56.9% returns compared to BSE Sensex with 23.2% returns.
Selection methodology: We pick the stock that has shown the maximum increase in ‘consensus analyst rating’ during the past three months. The consensus rating is arrived at by averaging all analyst recommendations after attributing weights to each of them (1 for strong buy, 2 for buy, 3 for hold, 4 for sell, 5 for strong sell). An improvement in consensus analyst rating indicates that the analysts are getting bullish on the stock. Only stocks with more than five analysts covering them are considered. You can see similar consensus analyst rating changes during the past week in ETW 50 table.
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This story originally appeared on: India Times - Author:Faqs of Insurances
