HG Infra Engineering soars 19% on robust March quarter results

The company said the strict discipline in selecting and executing orders were translating into robust margins and return profile

Shares of HG Infra Engineering soared 19 per cent to Rs 346.40, also its 52-week high, on the BSE in intra-day trade on Friday, after the company reported a robust set of numbers for the quarter ended March 2021 (Q4FY21), with standalone profit after tax jumping 91 per cent year-on-year (YoY) to Rs 97.70 crore on the back of strong revenue. The construction & engineering company had logged a profit of Rs 51.3 crore in Q4FY20. The stock was trading close to its record high of Rs 356, touched on April 23, 2018.

The company’s revenue during the quarter under review increased 65 per cent to Rs 1,027.8 crore from Rs 622.9 crore in the corresponding quarter of previous year, clearly reflecting the sharp pickup in execution. Earnings before interest, taxes, depreciation, and amortization (EBITDA) grew by 64 per cent YoY to Rs 166.5 crore from Rs 101.40 crore in the year-ago quarter.

The Ebitda margin was down 8 basis points (bps) YoY at 16.2 per cent during Q4 FY21, however ahead of analyst estimate of around 15.5 per cent. Margin beat is likely backed by better project mix and lower contribution by sub-contracting projects.

The management said robust execution capabilities reflected in strong growth in revenue and order book with timely execution of all projects with no delays in any project. The strict discipline in selecting and executing orders translating into robust margins and return profile, it said.

The Group is primarily engaged in the business of Engineering, Procurement and Construction (EPC) relating to roads, bridges, flyovers and infrastructure contract works and related activities.

ICICI Securities said that currently it has a positive outlook on HG Infra mainly on account of its comfortable order book position, better revenue visibility, healthy operating margin of 15 per cent plus, comfortable balance sheet position, controlled working capital cycle (driven by apt mix of private/government projects coupled with efficient project management) and healthy return ratios. "We await management commentary on future outlook, order inflows target, impact of state-wise lockdown on key projects and commodity price rise, asset monetization and guidance on recoveries from state government and private clients," the brokerage firm said in a note.