Buy HG Infra Engineering, target price Rs 0.17: Axis Securities

Axis Securities has a buy call on HG Infra Engineering with a target price of Rs 0.17. The current market price of HG Infra Engineering Ltd. is Rs 1084.9. HG Infra Engineering, incorporated in 2003, is a Small Cap company with a market cap of Rs 7227.80 crore, operating in the infrastructure sector.

HG Infra Engineering's key products/revenue segments include Contract Revenue, Sale of services and Scrap for the year ending 31-Mar-2024.



Financials
For the quarter ended 31-12-2024, the company has reported a Consolidated Total Income of Rs 1268.08 crore, up 39.95% from last quarter Total Income of Rs 906.11 crore and down -7.33% from last year same quarter Total Income of Rs 1368.39 crore. The company has reported net profit after tax of Rs 114.18 crore in the latest quarter.

The company's top management includes Mr.Harendra Singh, Mr.Manjit Singh, Ms.Monica Widhani, Mrs.Pooja Hemant Goyal, Mr.Ashok Kumar Thakur, Mr.Vijendra Singh, Mr.Dinesh Kumar Goyal, Mr.Harendra Singh, Ms.Sharada Sunder, Mr.Manjit Singh, Ms.Monica Widhani, Mrs.Pooja Hemant Goyal, Mr.Ashok Kumar Thakur, Mr.Vijendra Singh, Mr.Dinesh Kumar Goyal, Ms.Sharada Sunder. Company has MSKA & Associates as its auditors. As on 31-12-2024, the company has a total of 7 Crore shares outstanding.

Investment Rationale
As of December 31, 2024, the company's total order book stood at Rs 15,080 crore, equivalent to 3x FY24 revenue. A significant portion, 94%, of these projects is attributed to the Government of India, with the remaining 6% from the private sector, ensuring strong revenue visibility for the next 2-3 years. The company is anticipated to achieve a 15% CAGR revenue growth over FY24-26E.

Diversified Revenue Streams: Traditionally focused on Roads and Highways, the company has successfully expanded into the Railways and Solar sectors, securing multiple orders in these segments. These now contribute 25% of the total order book, reducing dependence on a single sector. Management is also exploring opportunities in the transmission sector, particularly in Tariff-Based Competitive Bidding (TBCB) projects, which share similarities with EPC projects. This diversification and an expanding sectoral presence are expected to support 15% CAGR revenue growth over FY24-26E.

Order Inflow & Segment Diversification: The company anticipates an order inflow of Rs 11,000-12,000 Cr in FY25, with projects worth around Rs 8,200 crore already secured in 9MFY25. Management expects 35-40% of the order book to come from non-road projects over the next 2-3 years. Additionally, the company aims to secure Rs 10,000-12,000 crore in new orders in FY26.

Promoter/FII Holdings
Promoters held 71.78 per cent stake in the company as of 31-Dec-2024, while FIIs owned 2.76 per cent, DIIs 12.14 per cent.