IGI Logo

Strong show; poised for better days ahead…

About the stock: GR Infraprojects (GRIL) is a leading player in the roads and highways sector having an overall order book size of | 17,005.6 crore.

* The company has delivered 26.6% revenue CAGR during FY16-22, wellcomplemented by 33.6% EBITDA CAGR and 39% PAT CAGR

* Prudent management, lean balance sheet position, healthy return ratios

Q1FY23 Results: GRIL reported a robust set of numbers during Q1FY23.

* Standalone revenue improved 16.1% YoY to | 2,476.7 crore. On a QoQ basis, the company has reported 9.2% growth. Its revenue included ~| 132.8 crore bonus received for early completion of the project

* EBITDA margin was at 19.6% (up 345 bps YoY) with better project mix and receipt of early completion bonus. Effectively, EBITDA at | 486.4 crore, was up 40.8% YoY. Excluding early completion bonus, margin was at 15.1%

* PAT was at | 321.1 crore (up 57.7% YoY)

What should investors do? GRIL’s share price has de-grown by ~20% over the past one year (from ~| 1,730 in July 2021 to | 1,390 levels in August 2022).

* We assign BUY rating (vs. REDUCE earlier) on the company as asset monetisation through InvIT will boost scalability, ahead

Target Price and Valuation: We value GRIL at a target price of | 1,620.

Key triggers for future price performance:

*  GRIL is likely to be one of the major recipients of thriving roads, railways and power transmission segments. Healthy order inflows to aid its order book position

* Strong order book position, receipt of appointed date in most of its projects, and execution pick-up to translate into 12.4% topline CAGR in FY22-24E

* Current order mix with built-in raw material price variation clauses in most of its contracts provides margin sustainability at ~16%

* Double-digit return ratios and lean balance sheet position

aAlternate Stock Idea: Besides GRIL, we like HG Infra Engineering in the infra space. ? Play on strong execution and lean balance shee

t* BUY with a target price of | 765/share

To Read Complete Report & Disclaimer Click Here

https://secure.icicidirect.com/Content/StaticData/Disclaimer.html

Above views are of the author and not of the website kindly read disclaimer