Buy G R Infraprojects Ltd For Target Rs.980 by Motilal Oswal Financial Services Ltd
Strong execution drives earning; order pipeline remains strong
* Revenue rose ~64% YoY to ~INR20.1b during 2QFY27 (33% above our estimate).
* EBITDA grew 59% YoY to INR1.91b (26% above our estimate). EBITDA margin stood at 9.5% in 2QFY27 (-30bp YoY). APAT rose ~23% YoY to INR1.61b (25% above our estimate).
* During 1HFY27, Revenue/EBITDA/APAT grew 45%/31%/5%.
* The order book currently stands at ~INR246b, with road projects accounting for 69% of the order book.
* GRINFRA reported strong execution in 2QFY27; however, margins remained under pressure. Nevertheless, the order book is robust, anchored by road projects and supported by increasing traction in new segments such as oil & gas, railways, power transmission, and tunneling. We largely maintain our estimates for FY27/FY28 and expect GRINFRA to clock a revenue and EBITDA CAGR of 18% and 29%, respectively, over FY26-28. We reiterate our BUY rating with an SoTP-based TP of INR980.
Robust order book, sector diversification, and strong financial discipline
* The order book stood at ~INR246b as of Sept’26. The road segment continues to dominate (69% of the order book), but the company is steadily diversifying into oil and gas, railways, metros, power transmission, hydro, tunneling, and telecom.
* The company expects FY27 order inflows of ~INR200b, comprising ~INR140- 150b from roads and ~INR35-40b from power transmission.
* The company’s standalone debt-equity stood at 0.04x, among the best in the sector. Consolidated net debt-equity stood at 0.53x
Key takeaways from the management commentary
* In 2QFY27, the company delivered strong execution, driving robust revenue growth of 64% YoY.
* EBITDA margins remain under pressure due to higher construction costs arising from geopolitical disruptions and elevated crude-linked commodity prices. Management indicated a 1.5-2.0% impact on margins from higher input costs, including steel, cement, aggregates, and transportation.
* Working capital days increased to 152 (vs. 98 as of Sept’25), driven primarily by higher debtor days.
* Management indicated that investments in subsidiaries stood at INR31b as of Sept’26, with equity commitment of INR5b expected in 2HFY27, while the balance equity commitment of INR26-27b for HAM/BOT projects is expected to be invested over FY28 and FY29.
* Monetization of 5-6 completed HAM assets could unlock approximately INR12.5b of invested equity during FY27.
Valuation and view
* While the company has a healthy order book and provides strong order inflow guidance, an improving bidding environment (lower competition and tighter prequalification norms), coupled with a strong balance sheet, provides visibility for sustainable growth.
* We expect GRINFRA to clock a revenue and EBITDA CAGR of 18% and 29%, respectively, over FY26-28. Reiterate our BUY rating with an SoTP-based TP of INR980.
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