Multibagger infra stock rises over 2% on LoI from Gujarat PSU

Shares of HG Infra Engineering rose over 2% in early deals on Thursday after the firm said it received a LoI from Gujarat Urja Vikas Nigam Ltd. The letter is for 300 MW/600 MWh out of the project of 500 MW/1000 MWh for setting up of Standalone Battery Energy Storage Systems in Gujarat under Tariff-Based Competitive Bidding (Phase-VI. The stock rose 2.3% at Rs 1136.65 in early deals. 

Market cap of HG Infra rose to Rs 8,168 crore on BSE. The stock has gained 108% in three years and risen 579.79% in five years. 

Total 1840 shares of the firm changed hands amounting to a turnover of Rs 20.72 lakh on BSE.

HG Infra shares have a beta of 1.4, indicating very high volatility in a year. 

The multibagger stock is trading lower than the 5 day, 10 day, 20 day, 30 day, 50 day, 100 day, 150 day and 200 day moving averages. 

"We wish to inform you that H.G. Infra Engineering Limited (the “Company” or “HGINFRA”) has received Letter of Intent (LOI) from Gujarat Urja Vikas Nigam Ltd for 300 MW/600 MWh out of the project of 500 MW/1000 MWh for setting up of Standalone Battery Energy Storage Systems in Gujarat under Tariff-Based Competitive Bidding (Phase-VI)," said  HG Infra. 

Anand Rathi has a price target of Rs 1749 on the stock post Q4 earnings against the earlier target of Rs 1781. Anand Rathi noted that HG Infra’s FY25 results are reassuring, thanks to a consistent execution pace, ongoing operating profitability, and stable orders, despite some one-off margins in Q4. This very foundation lays the groundwork for an even stronger performance moving forward.

Leverage rose on seasonality and financial prudence but the balance sheet is in shape to effect an even better scale ahead; also, healthier receipts expected in FY26, monetization proceeds from six near-completion assets would help. Proven execution ability, healthy assurance, a broad-based opportunity landscape (on continuing diversification efforts), a well-set balance sheet and an unemotional approach to asset ownership are remarkable.

"Hence, we maintain a Buy with a higher 12-month price target of Rs 1,749 (earlier Rs 1781) on rolling forward to FY27," 

"We consider execution, margins and order inflow in FY25. We raise our FY26e revenue 2% and lower our EBITDA margins 22bps. We introduce FY27e revenue growth to 14.2% y/y and the EBITDA margin to 15.1%. The stock (excluding investments) now trades at a PER of ~7.8x FY27e. Risk. Slow disbursements," said the brokerage. 

HG Infra Engineering is engaged in engineering, procurement and construction (EPC) business including maintenance of roads, bridges, flyovers and other infrastructure contract works.