HG Infra Engg jumps 10% on bagging Rs 522 crore highway project from NHAI

In its regulatory filing, the company on Thursday said it has been declared L-1 (lowest) bidder by the NHAI for the construction of proposed Rewari Bypass (NH-1l) in Rewari, Haryana.

Shares of HG Infra Engineering jumped over 10 per cent to Rs 269 apiece on the BSE on Friday, a day after the company said it has bagged a highway project worth Rs 522 crore in Haryana from the National Highways Authority of India (NHAI).

At 10:44 am, the stock was trading over 6 per cent higher at Rs 259. In comparison, the S&P BSE Sensex was trading 267 points or 0.65 per cent higher at Rs 41,431 levels.

In its regulatory filing, the company on Thursday said it has been declared L-1 (lowest) bidder by the National Highways Authority of India (NHAI) for the construction of proposed Rewari Bypass (NH-1l) in Rewari, Haryana on Hybrid Annuity Mode (HAM) amounting to Rs 522.02 crore.

The completion period for the project, which has a total length of 14.40 km, is two years, the filing added.

Brokerages are bullish on the stock. "HG Infra is trading at an attractive valuation of 7.1x FY21E P/E. We maintain BUY with Rs 441/sh TP (12x FY21E Standalone EPS and HAM projects at 1x invested equity)," said HDFC Securities. However, the brokerage has cut FY20E Rev/EBIDTA/APAT by 5.2/5.5/10.8 per cent, owing to loss of revenue due to National Green Tribunal (NGT) ban on construction.

"Plans for monetisation of the company’s HAM portfolio are under consideration. However, the company stressed on first achieving significant physical progress across the projects (~30-50%) which will make these projects an attractive proposition for the incoming investor," analysts at HDFC Securities wrote in a note dated December 23. 

Anand Rathi Research is positive on the stock after visiting HG Infra’s first hybrid annuity project, Gurgaon-Sohna."Barring the construction ban (in the NCR) led slight disruption, the progress is healthy and comes as a testament to the company’s execution capabilities. Interaction with the management suggests there is no deviation from the core strategy that enabled it to scale current highs, and thus, future looks bright," the report added. 

The brokerage has 'buy' rating on the stock with the target price of Rs 377. 

In the calendar year 2019, the stock has rallied over 17.5 per cent while the Nifty50 index has climbed around 12 per cent.