300% return in 5 years! What's next for this smallcap multibagger stock?

Shares of HG Infra Engineering have delivered over 300 per cent return in the last 5 years. Notably, the multibagger stock has recovered over 78 per cent from its 52-week low of Rs 532, hit on November 10, 2022.

The company posted good set of numbers for the quarter ended June 2023. It reported a 37 per cent rise in net profit to Rs 1,504 crore, as against Rs 1,094 crore in the same period last year. Revenue from operations jumped 22 per cent to Rs 13,512 crore during the quarter from Rs 11,059 crore last year.

About the company

HG Infra is an Indian road infrastructure development company. It began its journey in 2003 as HG Infra Engineering Limited, an infrastructure company promoted by Shri Hodal Singh. It began to execute civil construction projects, like extension and grading of runways, railways and land development and diversified into water pipeline projects as well.

What's next?

Centrum Broking believes that trend in robust execution amidst good orderbook, stable margins and healthy balance sheet is likely to continue. The management indicated that it is likely to receive the required approvals for the sale of 4 HAM assets in this month and the deal is likely to be concluded soon.

"HG Infra’s orderbook stood at Rs 116.7 billion as of June 30, 2023. Highway projects constituted 89 per cent of total OB whereas the rest was from Railways and metro segment. HAM projects constituted 47 per cent of OB whereas rest were EPC projects. Private projects (Adani projects) constituted 30% of OB. The management has guided for Rs 70-80 billion of order inflow this year, out of which Rs 20 billion is expected from non-road segment," it said.

Centrum Broking has a 'Buy' rating on the stock with a target price of Rs 1,283, suggesting an upside potential of over 35 per cent from Thursday's closing price of Rs 947.60.

"The recent breakout above the level of 890 has added strength to the structure of the stock. However, the stock is currently facing resistance around its all time high, but the undertone remains strong with strong upside momentum on its side, as it hovers above all its EMA’s," said Osho Krishan, Senior Analyst - Technical & Derivative Research at Angel One.

"The upside zone of 980-1000 continues to restrict its upward march, but on the downside, the zone of 890-900 is likely to provide a cushion in case of any downturn," he added.

 

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