Q3 FY21 Result and Concall Update - HG Infra Engineering - YES Securities

(Rating: BUY, TP: Rs 297, Upside 36%)

- View - With appointed dates in place for all projects and better labor availability, the execution momentum is expected to continue. Operating margin is expected to remain healthy at ~15% levels. While the Order inflows have been disappointing, the current bid pipeline would ensure opportunity to bag orders over the next few months. Improving working capital position (certain slow moving debtors getting cleared) provides comfort. We marginally increase our estimates for FY21 to incorporate the better than expected performance and maintain our BUY rating for target of Rs.297 (based on SOTP valuation).

- Quarter summary - HG Infra reported topline growth of 28% yoy (to ~Rs.7.3 bn). The execution improved sharply on qoq basis post monsoon and with improved labor availability. The start of some major projects during the quarter also supported execution. Operating margin improved to 16.1% (+70 bps yoy) with better execution. PAT stood at Rs.655 mn (58% yoy/ 101% qoq) led by higher revenues.

- Order book - Currently order book stands at Rs.59.7 bn of which HAM and EPC mix is at 22%:78%. The company saw no new order inflows during the quarter as competition was high. The one order of IRCON where Company stood L1 was cancelled as HG Infra's bid was higher than authority estimates. There has been minor change in scope of work in certain existing projects which has increased the order book by Rs.2-3 bn. The bid pipeline is strong and HG expects Rs.35-40 bn worth of project wins during Q4 FY21.

Shares of H.G. Infra Engineering Ltd was last trading in BSE at Rs.217.85 as compared to the previous close of Rs. 216.75. The total number of shares traded during the day was 14119 in over 447 trades.

The stock hit an intraday high of Rs. 223.75 and intraday low of 215.05. The net turnover during the day was Rs. 3101344.

Source : Equity Bulls

Keywords