Multibagger Stock: HG Infra Engineering gained over 160% in less than 2 years, climbed 727% in 4 years; should you buy?

Shares of HG Infra Engineering, an infrastructure company, have experienced a consistent upward trajectory in recent years. The company, which is engaged in Engineering, Procurement, and Construction (EPC) services, has seen its shares gain 163% in less than two years and an astounding 727% in just four years.

In April, the shares recorded their largest monthly gain in three years, surging by 30%, and have continued their upward trend this month with another 14% increase so far. During Tuesday's trading session, the stock breached the ₹1,400 mark for the first time, reaching an all-time high of ₹1,417.95 per share. 

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In the last quarter of the previous fiscal year, the company reported healthy numbers, with revenue growing by 11.2% year-on-year (YoY) to ₹1,635 crore. The net profit for the quarter stood at ₹160 crore, compared to ₹148 crore in Q3FY24.

For the entire fiscal year (FY24), the company's revenue from operations increased by 15.9% YoY to ₹5,121 crore, while the net profit surged to ₹545 crore from ₹421 crore, reflecting a growth of 29.5%.

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The management has guided 15-20% revenue growth and 15-16% EBITDA margins for FY25. The anticipated revenue growth will primarily stem from existing under-construction projects. Regarding order inflows, the company expects to receive ₹11,000–12,000 crore in FY25, with an expected increase in momentum following the elections due to the robust NHAI pipeline.

As of FY24, the order book stands at ₹12,434 crore, representing a 2.4x TTM book-to-bill ratio. In Q4FY24, the company secured orders totaling approximately ₹4,350 crore across the railways, solar, and road segments. Notably, the order book diversification has shifted, with roads now constituting 68%, while roads/metro and solar make up 21% and 10% of the order book, respectively.

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Although the order inflow fell short of the initial target of ₹8,000 crore, the current order inflows, which surpass those of peers, ensure that the 15-20% revenue growth guidance for FY25 remains achievable, said domestic brokerage firm ICICI Direct Research. 

It forecasts a 16.3% CAGR in topline over FY24–26E, reaching ₹6,923 crore. "Sustained margins at 15.5-15.7% would ensure, 19.4% CAGR in earnings over FY24-26E," it said. 

The brokerage highlights the company's lean balance sheet, with a standalone gross of ₹451 crore and cash reserves of ₹199 crore. Additionally, it anticipates receiving the remaining ₹60 crore from the first tranche and ₹130 crore from the Rewari Bypass monetisation by June 2024. 

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For HAM projects, it said that the company has infused ₹694 crore thus far, with plans to invest an additional ₹505 crore in FY25 and the remaining ₹262 crore evenly over FY26 and FY27. Internal accruals are expected to meet the equity requirement.

The brokerage retained its ‘buy’ call on the stock with a target price of ₹1,445 apiece. This target price reflects a new all-time high for the stock.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.