Broker’s Call: HG Infra Engineering (Hold)

HG Infra Engineering's (Hold) reported a decline in revenue for the quarter, with figures shrinking by 47% year-on-year to ₹900 crore. The company attributes the drop to delays in appointed dates, supply chain issues, and project-specific hurdles. EBITDA also contracted by 67% to ₹77 crore, while margins narrowed by 530 basis points to 8.5%.

Adj. loss amounted to ₹1.8 crore, as opposed to APAT of ₹130 crore. The company's order-book, currently valued at ₹14,500 crore, reflects strong inflows from the highway sector during the quarter. However, the executable order-book stands at just ₹8,000 crore due to land acquisition delays and project-related challenges. Despite this, HG Infra secured new orders worth ₹5,300 crore in Q1.

The widening gap between order-book and execution remains a concern, as multiple projects face delays. The management has revised FY27 revenue guidance downward to ₹6,000-6,500 crore from the previous estimate of ₹7,000 crore, while maintaining margin guidance at 13.5-14% and order inflow guidance firm at ₹11,000-12,000 crore. However, the outlet expects a slower pace of execution than indicated by the guidance due to a smaller executable order-book. They maintain a Hold rating with a revised target price of ₹535, down from the previous ₹610.