3 infra stocks to buy: J Kumar, HG Infra, GR Infraprojects top picks, says Axis Securities

Axis Securities in its Q1 review note suggested three infra-related stocks, which investors can buy for long-term gains. They are J Kumar Infraprojects Ltd, H.G. Infra Engineering Ltd and G R Infraprojects Ltd. H.G. Infra is expanding its portfolio, while JK Kumar and G R Infraprojects have strong bidding pipelines, the brokerage said while suggesting 'Buy' recommendations on the three stocks.

G R Infraprojects | Buy | Target price: Rs 1,820

Axis Securities said G R Infraprojects' order book position, including L1 projects, stood at Rs 19,320 crore, providing revenue visibility for the next 24 to 36 months. For FY25, the company anticipates an order inflow of Rs 15,000-20,000 crore across all segments, with a significant contribution from the road sector. It is expected that the company will grow its revenue at a CAGR of 10 per cent over FY24-FY26, the brokerage said..

"The bidding pipeline remains strong, exceeding Rs 2.5 lakh crore, with Rs 1.7 lakh crore from the road sector, encompassing EPC, HAM, and BOT verticals, and the balance from other sectors. In addition to road projects, the company has successfully diversified into other segments such as Railways, Ropeways, Optical Fibre, Multi-Modal Logistic Parks (MMLPs), and Power Transmission to reduce its dependence on road projects," it said.

G R Infraprojects received Rs 60 crore as a dividend from Bharat Highways InvIT in Q1 and it expects to receive Rs 50-60 crore every quarter as a dividend on its units with InvIT. This will support the company's profitability moving forward, Axis Securities said.

J Kumar Infraprojects Ltd | BUY | Target price: Rs 950

J Kumar Infraprojects order book stood at Rs 19,820 crore, including L1 orders of Rs 6,500 crore (Virar Alibaug Multi-Modal Corridor & Hari Nagar building). The total order book now stood at Rs 26,320 crore, which is 5 times its FY24 revenue. 

A healthy and robust order book provides revenue visibility for the next 3-4 years, the brokerage said adding that J Kumar Infraprojects is expected to report revenue CAGR of 18 per cent over FY24-FY26E.

"The company has a strong bidding pipeline of Rs 20,000-Rs 30,000 crore, including projects from Metro, elevated corridors, road tunnels, and buildings. It aims to win projects worth Rs 8,000-10,000 crore in FY25, which includes the current L1 orders. Additionally, the company is exploring bids for irrigation projects to further diversify its project profile," it said.

The brokerage expects J Kumar Infraprojects' Ebitda margins to improve in FY26 from the current 14-15 per cent range to 15-16 per cent, driven by efficient project execution and the addition of more orders.

HG Infra Engineering Ltd | BUY | Target price: Rs 1,800

Axis Securities said H.G. Infra's total order book stood at Rs 15,642 crore, which is equivalent to 3 times its FY24 revenue. A significant portion of this order book, 91 per cent, is attributed to the Government of India. The remaining 9 per cent is from the private sector. 

"This distribution provides revenue visibility for the next 2-3 years. The company is projected to achieve revenue growth of 16 per cent CAGR over the period from FY24 to FY26E.The company is expanding its portfolio by exploring opportunities beyond road and railway projects. In Mar’24, it secured its first solar project worth Rs 1,307 crore in Rajasthan from JDVVNL," Axis Securities noted.

Additionally, H.G. Infra is looking to secure orders in the water segment to further diversify its business profile. This strategic diversification drive augurs well for the company.

"The company expects an order inflow of Rs 10,000-12,000 crore in FY25, with Rs 8,000 crore anticipated from highway projects, Rs 2,000 crore from railway projects, and Rs 1,000 crore from solar and water projects. The management expects 35-40 per cent of its order book to come from non-road projects over the next 2-3 years," Axis Securities noted.