HG Infra Engineering Limited (HG INFRA) is an Indian road infrastructure company which provides EPC services, maintenance, and construction of roads, bridges, flyovers, and other infrastructure projects. Headquartered in Jaipur, Rajasthan, company has a primary focus on roads and allied sectors. However, it is actively seeking to diversify into water infrastructure and railways. It has a presence across 9 states with ~53% of the order book in the North.

Recommendation PRICE RANGE Target Price Time Horizon
Buy ₹  930 Rs. 1150 12 Months

Stock Details

Market Cap. (Cr.) 6272.39
Equity (Cr.) 65.17
Face Value 10
52 Wk. high/low 988 / 532
BSE Code 541019
Book Value (Rs.) 294.90
Industry Construction
P/E 11.74


Share Holding

Pattern %


FIIs 2.57
Institutions 13.14
Non Promoter Corp. 0.72
Public & Others 9.04
Government 0.00
Total 100.00

Price Chart:

Key Investment Rationale:

  • HG Infra reported a favorable set of numbers in Q1FY24. It recorded revenue of Rs 1,271 Cr, an increase of 19% YoY. Adjusted PAT was Rs 118 Cr, up 21% YoY, while EBITDA was Rs 205 Cr, up 26% YoY for the company. It recorded EBITDA margins of 16.1% in Q1FY24 as opposed to 15.2% in Q1FY23.
  • The company’s order book is strong at Rs 11,674 Cr (as of June 30, 23), with 53% coming from EPC road projects and the remaining 47% from HAM road projects. With the Indian government funding 70% of the overall projects and the private sector providing the remaining 30%, implying revenue visibility for the next 2-3 years.
  • A total order inflow of Rs 7,000 –  8,000 Cr is anticipated by the company for FY24, of which Rs 5,000 Cr is anticipated from HAM projects, Rs 1,000 Cr from EPC projects, and the remaining Rs 2,000 Cr from Railways and Water projects under Jal Jeevan Mission. The majority of the projects are expected to be completed by Q3FY24. Further the management expects NHAI to grant 4,000 kilometers of road projects by December 23. The company has submitted bids for a few projects totaling more than Rs 6,000 Cr, subject to approval by the authority.
  • The NTPC Simhadri project and the RVNL Bhanupali-Bilaspur project both received their appointed dates (AD) during the quarter. For the three EPC projects, Maharashtra Pckg-1/2/3, company received a completion certificate. The AD for the company’s Karnal Ring Road/Varanasi Kolkata Pckg-10&13 projects is anticipated by Q2/Q3FY24. Further, with mobilization at the Kanpur Central Railway project at an advanced level, AD is expected in Q2FY24.
  • HG Infra has agreed to sell its 4 HAM projects to Highway Infrastructure Trust for Rs.1,394 Cr. This includes an equity value of Rs.531 Cr., which is 1.5x of the book value. Company has received the approval of lenders for 2 SPVs and expects to receive the approval for the 3rd and 4th SPVs by August and December 2023, respectively.

Business Overview:

Company’s main business operations include (i) providing Engineering, Procurement and Construction (“EPC”) services and (ii) Hybrid Annuity Model (HAM) projects.


(i) EPC Projects: EPC is a project delivery method in which the company is responsible for the entire project, from engineering and design to procurement of materials and construction. The company bears all the risks associated with the project, including construction delays, cost overruns, and defects. As of Q1FY24, company has 53% EPC projects of the total orders.


(ii) HAM Projects: HAM is a project delivery method that combines the features of the EPC model and the BOT (Build, Operate, and Transfer) model. Under the HAM model, the government bears the majority of the construction risk, while the company bears the operational risk. The government pays the company an annuity (fixed amount of money paid regularly) for a specified period of time, during which the private sector operates and maintains the project. As of Q1FY24, company has 47% HAM projects out of the total orders and is further foraying into HAM projects to address the growing opportunity.


Industry Overview & Outlook:

Indian economy depends heavily on the infrastructure sector, which propels overall growth and is given top priority by the government. Infrastructure development is essential if we are to reach a $5 trillion economy by 2025. The Government introduced the National Infrastructure Pipeline (NIP) alongside initiatives like ‘Make in India’ and production-linked incentives (PLI) to support this growth.

Road construction is set to accelerate: NHAI’s plans to award road projects under the Bharatmala Pariyojana and the National Infrastructure Pipeline’s support will drive this momentum. Road construction companies stand to benefit significantly from these projects, especially under the EPC and HAM models. The government intends to speed up the construction of roads for the fiscal year 2023–2024 by awarding contracts for new projects that will cover roughly 12,000–12,500 kilometers. Additionally, a focused effort will be made to complete ongoing projects before the general elections in 2024. In the fiscal year 2023–2024, it is projected that this focused effort will significantly increase the rate of project execution. With a strong order book, favorable bidding prospects, and project diversification, the sector’s long-term outlook remains positive.

Financial Overview:

Profit and Loss Statement:            

Particulars (In Rs. Cr.) FY21 FY22 FY23
Revenue from Operations 2,609.72 3,751.43 4,622.01
Other Income 7.38 7.32 18.23
Total Income 2,617.10 3,758.75 4,640.24
Cost of materials consumed 1,185.65 1,791.91 2,143.50
Changes in inventories 0.00 0.00 0.00
Employee expense 110.79 129.88 198.18
Other Expense 830.07 1,119.54 1,384.96
EBITDA 490.6 717.4 913.6
EBITDA Margin (%) 18.8% 19.1% 19.8%
Finance Cost 94.16 117.70 153.77
Depreciation & Amortization expense 84.43 85.10 96.38
Profit Before Tax 312.00 514.62 663.45
Tax 75.34 134.59 171.38
Profit After Tax 236.66 380.03 492.07
PAT Margin (%) 9.1% 10.1% 10.6%
EPS (in Rs.) 3.76 6.22 6.76


Cash Flow Statement:

Particulars (In Rs. Cr.) FY21 FY22 FY23
Cash Flow from Operating Activities
Profit Before Tax 228 455 569
Interest 60 53 63
Depreciation & Amortization 84.4 85.1 96.3
Tax Paid 68.5 110.4 157.1
Increase/Decrease in Working Capital 175.3 -362.6 6.4
Others -5.5 -5.5 9.4
Net Cash Flow from Operating Activities 527 114 587
Cash Flow from Investing Activities
Increase/Decrease in Fixed Assets -97.7 -67.6 -339.2
Free Cash Flow 429.6 46.4 247.9
Increase/Decrease in Investments -172.4 -105.3 -343.5
Other 3.1 21.3 3.2
Net Cash Flow from Investing Activities -270 -173 -683
Cash Flow from Financing Activities
Change in Net worth 97
Increase/Decrease in Debt -81.9 -72.8 186.3
Dividends Paid -5.2 -6.5
Net Interest Paid -59.3 -52.8 -62.3
Net Cash Flow from Financing Activities -141.2 -33.8 117.5
Increase/Decrease in Cash 116.0 -92.7 21.9
Opening Cash Balance 24.0 139.9 47.2
Others 118.5 111.3 110.3
Net Cash Flow for the Year 258.5 158.5 179.4

Balance Sheet:            

Particulars (In Rs. Cr.) FY21 FY22 FY23
Shareholder’s Funds 1032.2 1364.3 1778.4
Share Capital 65 65 65
Reserves & Surplus 967 1299 1713
Total Debt 290.2 315.9 507.1
Other Liabilities 86.3 9.2 33.9
Current Liabilities 772.0 690.8 1189.8
Total Liabilities 1148.5 1015.9 1730.8
Total Equity & Liabilities 2180.7 2380.2 3509.2
Fixed Assets 484.9 461.1 706.6
Investments 261.2 354.5 744.7
Other Non-Current Assets 30.4 47.2 70.9
Current Assets 1404.2 1517.4 1987.0
Inventories 168.0 183.6 235.3
Sundry Debtors 653.4 695.3 871.2
Cash & Bank 258.4 158.5 179.4
Loans & Advances 5.0 23.3 6.2
Total Assets 2180.7 2380.2 3509.2


Key Ratios FY21 FY22 FY23
Debt to Equity 0.68 0.78 0.92
Current Ratio 1.62 1.85 1.79
ROCE (%) 24.30 27.82 25.20
ROE (%) 25.06 30.42 29.38
EBITDA Margin (%) 18.80 19.12 19.79
PAT Margin (%) 9.07 10.13 10.67


Valuation Ratios (TTM)
P/E 10.43
P/B 2.9
Market Cap/Sales 1.14


We are positive on the HG Infra considering its healthy order book of Rs.11,700 crore as of 1QFY24, good execution capabilities, comfortable working capital cycle, geographical diversification and concentration on asset monetization. With the current order book that is 2.5x TTM, the company is well-positioned to take advantage of the expanding prospects in the road infrastructure industry. Hence, we advise investors to buy the company at CMP with the target price of Rs.1150 for one year period.




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