Gr Infraprojects Stock Price: Fallen Star! Down 36% from highs, this recently listed roadbuilder is back in demand
The company has managed to win orders worth Rs 7,200 crore over the last one month with the latest being two orders in Maharashtra. The majority of the new order wins have been driven by HAM (hybrid annuity models) projects from NHAI. It has also bagged its first power transmission project.
Its order book now stands at Rs 23,000 crore, analysts tracking the company said, which is 2.9 times FY22 expected revenue. “The recent wins allay concerns of a weak order book. We expect [the company] to clock 12 per cent revenue growth over FY21-24, with Ebitda margin in the 16-17 per cent range,” said Alok Deora of Motilal Oswal.
The broker maintained its ‘buy’ rating with a revised target price of Rs 1,900 per share, based on SoTP (sum of the parts) valuation. It values the core EPC business at 16x FY24E EPS and the BOT business at 1.2x on invested equity.
The company management wants to keep a larger focus on road building, which is reflected in its order book with a 90 per cent share. Though order wins in other projects like metro and power transmission would help it diversify and may even become a big source of revenue in the future.
“Recently, it has also diversified into the power transmission segment to leverage its existing infrastructure as well as to insulate its business from future uncertainties,” said Uttam Kumar Srimal of Axis Securities.
“While it continues to capture opportunities in the construction space, it is increasingly eyeing opportunities from the public sector to capitalise on the government’s spending on Infra development.”
Srimal, who recently initiated coverage on the counter with a ‘buy’, set the target price at Rs 1,775. He highlighted that the company has performed well in the past and its balance sheet remains “lean and robust”.
The stock on Tuesday traded at Rs 1,492, up nearly 3 per cent on BSE.
Moreover, the management is actively looking to offload HAM projects via the InvIT route, which is likely to materialize over the next few quarters, said Deora. With InvIT, it expects its competitiveness to improve as the cost of capital can reduce. An InvIT will allow freeing up of capital and the company will be in a position to bid for more projects.
ICICI Securities also said GR Infra is well placed to deliver 14.7 per cent and 19.7 per cent revenue and PAT CAGR, respectively, over FY22-24E. “Elevated profitability with strong asset turnover is expected to result in healthy return ratios,” it added earlier this month.
The broker has set the target price at Rs 1,780 with a buy rating.
“Capex and equity commitments are largely set to be funded by internal accruals and asset monetisation. Order wins, however, would be keenly watched for medium-term growth visibility,” the broker said.
