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Our view

G R Infraprojects Ltd (GRINFRA) delivered a stellar performance beating our and street estimates on all fronts. The company is awaiting appointed dated (AD) for eight newly awarded HAM project which is expected to be received in 3Q. Management expects execution to ramp up significantly from these projects in FY24E. As large part of order book is yet to start execution, management has given a revenue guidance of 5‐10% growth with EBITDA margins of 16‐17% range for FY23E. On the back of healthy tendering activity and robust bid pipeline management expects order inflows of Rs80‐100bn (Additional to projects bagged in Apr’22) for FY23E. 

We estimate a robust 10%/11% revenue/PAT CAGR over FY22‐24E, 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 18x FY24E core EPS and value equity invested in HAMs at 1x. We have revised our TP to Rs1.803 and maintain ‘BUY’ rating on the stock.  

Result Highlights

* For Q4FY22, GR Infra’s net revenues de‐grew 12.4% YoY to Rs24bn (above YSec estimate of Rs18.5bn) with pickup in execution momentum.

* EBITDA came in at ~Rs5.1bn muted growth YoY (above YSec and consensus estimates of Rs3.2bn/Rs3.8bn) while blended EBITDA margins grew by 271bps to 21.2% (above YSec estimate of 17.3%). The margins improved on account of lower raw material cost.

* On bottom‐line front, Adj PAT came in at Rs2.8bn (YSec estimate of Rs2.4bn) largely attributed to better operating margins

* The company has bagged robust orders worth Rs 66.8bn in Q4 leading to strong revenue visibility

* At the CMP, the stock trades at a P/E of 16.6x and 13.3x of FY23E and FY24E.

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