Pick of the week: Axis Securities sees 10% upside in HG Infra Engineering; here's why
HG Infra Engineering as its 'top pick of the week'. This is on the back of its attractive valuations, strong growth opportunities, positive company-specific triggers, and macroeconomic tailwinds. The brokerage has a ‘buy’ call on the stock with a target price of ₹935, implying a potential upside of 10 percent.
HG Infra Engineering Limited (HGIEL), incorporated in 2003, is a Jaipur (Rajasthan) based infrastructure company engaged in the construction, development, designing, and management of infrastructure projects. Over the last 18 years, the company has successfully transformed itself into a primary road developer from a sub-contractor and has completed over 35 projects during this period. The stock has gained 46 percent in the last 1 year and 42 percent in 2023 YTD, giving positive returns in 8 of the 12 months in the current calendar year so far.
It gained the most in April, 12.55 percent, and shed the most in October, down over 5 percent. It has risen almost 2 percent in December so far, snapping losses after 2 months in the red. It lost 10 percent in October and November combined.
Currently trading at ₹866.40, the stock is almost 15 percent away from its record high of ₹1,016.75, hit on September 6, 2023. Meanwhile, it has advanced 61 percent from its 52-week low of ₹537.65, hit on December 23, 2022. HG Infra Engineering's Q2FY24 profit after tax came lower than the Street estimate, as PAT declined 5 percent YoY.
The miss comes on the back of higher interest costs and depreciation. Meanwhile, its revenue growth of double digits and EBITDA margin were healthy. Its order book stood at ₹10,700 crore for Q2FY24 and the firm had guided order inflow of ₹5,000-6,000 crore for FY24.
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