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Yes Securities Report
HG Infra Engineering Ltd. reported healthy revenue of Rs 12.7 billion beating our and street estimates on the back of strong execution along with Ebitdam of 16.1% supported by cooling of raw material prices.
During Q1, the order inflow has been weak, however with given strong bid pipeline of Rs 70 billion, management expects to bag orders worth Rs 70-80 billion in FY24E.
Current order book of Rs 117 billion gives revenue visibility for next two-three years.
On the back of robust bid pipeline, strong order book and two hybrid-annuity-model projects expected to receive appointed date by Q2 FY24E, management has maintained it earlier guidance of revenue of Rs 55 billion for FY24E with Ebitda margins of 16%.
We remain positive on HG Infra given its-
comfortable order book (~Rs 117 billion as on Q1 FY24),
strong execution capabilities,
comfortable working capital cycle,
geographical diversification and
its transition into full-fledged contractor and focus on asset monetisation.
We expect HG Infra to post revenue/Ebitda compound annual growth rate of 21%/20% over FY23/FY25E.
At current market price, the stock trades at a price/earning of 12 times/9.8 times on FY24E/FY25E EPS and an enterprise value of 7.5 times/6.2 times FY24E/FY25E Ebitda.
We maintain 'Buy' rating with a target price of Rs 1,202/share, implying an upside potential of 29% from the current levels.
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