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Our view

G R Infraprojects Ltd (GRINFRA) delivered a subdued performance, missing revenue/EBITDA estimates by 13% / 23%. Execution was affected by delay in receipt of appointment dates of newly awarded projects. The company has a robust orderbook of Rs196bn indicating revenue visibility of 2-3years. GRINFRA awaits AD for 11 HAM assets, majority of which is likely to be received by Q3FY24E. Revenue contribution from these assets will be substantial from FY25E onwards. For FY24E, the company has retained its guidance of revenue growth of 10%, with EBITDA margin of 15-16%.

We estimate 10%/12% revenue/PAT CAGR over FY23-25E, led by a healthy order backlog and robust bid pipeline. Cash generation has historically been strong and should continue to support GRINFRA’s capital commitments. GRINFRA’s credentials compare well with its peer set among highway developers, which justify its relatively premium valuations of EPC business at 14x FY24E core EPS and value equity invested in HAMs at 1x. We maintain ‘BUY’ rating on the stock with a TP to Rs1,703.

Result Highlights

* For Q1FY24, GR Infra’s net revenues de-grew 13.1% YoY to Rs21.5bn (below our estimate of Rs24.7bn) due to delay in start of construction in newly awarded project.

* EBITDA came in at ~Rs3.1bn, 35.3% de-growth YoY (below our estimates of Rs4.1bn) while blended EBITDA margins grew by 502bps to 14.6% (below our estimate of 16.5%). The margins were impacted on account of higher raw material cost.

* On bottom-line front, Adj PAT came in at Rs2.1bn (our estimate of Rs2.7bn) largely attributed to lower operating margins

* At the CMP, the stock trades at a P/E of 13.1x and 11.6x of FY24E and FY25E.

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