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  • 10 Nov 2022
  • ICICIdirect Research

HG INFRA REPORTS MISS ON TOPLINE DRAGS PERFORMANCE

HGINFRA - 1551 Change: 25.85 (1.69 %)

News:

 HG Infra Engineering Ltd’s revenue on standalone basis has improved merely by 0.3% YoY to Rs 752.1 crore possibly impacted by execution slowdown pace due to heavy and extended rains across majority of its project sites. However, EBITDA margin stood at an elevated level of 16.1% (down 19 bps YoY). We believe, the performance at the operating level improved with softening in commodity prices and better project mix. Effectively, EBITDA at Rs 120.8 crore, was down 0.9% YoY. At net level, muted topline performance coupled with higher depreciation and interest cost translated into 7.5% YoY de-growth in PAT (to Rs 64.6 crore).

View:

 While its performance in Q2 FY23 remains mixed bag, we have a positive outlook on HG Infra mainly on account of a) its comfortable order book position (Rs 11,508 crore as on June 30, 2022; 3.1x book to TTM revenues), b) better revenue visibility, c) healthy operating margin, d) comfortable balance sheet position, e) controlled working capital cycle (driven by apt mix of private/government projects coupled with efficient project management) and f) healthy return ratios

Impact:

Neutral