Buy G R Infraprojects Ltd for the Target Rs. 1,360 by Motilal Oswal Financial Services Ltd
Muted quarter; execution to improve ahead
Order pipeline remains strong
* G R Infraprojects (GRINFRA)’s revenue rose 9.4% YoY to ~INR12.3b during 2QFY26 (vs. our estimate of INR13.9b).
* EBITDA margin stood at 9.8% in 2Q FY26 (-60 bps YoY) vs. our estimate of 11.7%. EBITDA rose by 3% YoY to INR1.2b and was 26% below our estimate.
* APAT grew ~13% YoY to ~INR1.3b (10% below our estimates) due to lower depreciation and interest cost.
* The order book currently stands at ~INR211b (excl. L1), with road projects accounting for 65% of the order book. Management expects revenue growth of 5-10% in FY26 with a margin of ~11-13%. GRINFRA expects order inflows of INR200b-250b in FY26 with a pickup in awarding activity, especially in largesized projects and diversification to other infra sectors.
* GRINFRA delivered a muted performance in 2QFY26, with margins under pressure. Going forward with the monsoon impact behind, execution is likely to substantially improve. Its order book remained robust, anchored by road projects and complemented by increasing traction in new segments such as railways, power transmission, and tunneling. We cut our EPS estimates for FY26 by ~4% on account of weaker execution and largely maintain our EPS estimates for FY27. We expect GRINFRA to clock an 11% revenue CAGR over FY25-28, with an EBITDA margin in the range of 12-14%. We reiterate our BUY rating with a revised SoTP-based TP of INR1,360.
Robust order book, sector diversification, and strong financial discipline
* GRINFRA’s order book stood at ~INR211b (ex-L1) and ~INR254b (incl. L1). The road segment continues to dominate (65% of the order book), but the company is steadily diversifying into railways, metros, power transmission, hydro, tunneling, and telecom.
* The company highlighted that the current project pipeline remains healthy across multiple infrastructure segments. The highway segment constitutes the largest opportunity with projects worth approximately INR2.82t, followed by railways (INR260b), metros (INR220b), hydro (INR280b), tunnel (INR190b), and power transmission (INR240b). The ropeway segment currently offers a smaller opportunity compared to other verticals.
* GRINFRA targets order inflows of INR200-250b in FY26, led by an uptick in awarding from NHAI, and is optimistic about FY27 inflows (~INR300-350b).
* The company repaid INR2.62b in debt during the quarter, reducing its standalone debt-to-equity ratio to 0.04x—among the lowest in the sector. Working capital days improved to 98 days (vs. 153 days as of Sep’24), driven primarily by better realization from debtors.
Key takeaways from the management commentary
* Management expects revenue growth of 5-10% in FY26 with margins in the 11- 13% range. The guidance has been lowered from the earlier 10-15% due to a delay in project awarding by the government.
* Promoter equity commitment in HAM projects stands at INR32b, with INR4-5b to be infused in 2HFY26 and INR10b each in FY27, FY28, and FY29.
* Management indicated that the margin trajectory will be contingent upon the strength of order inflows. A higher quantum of project wins is expected to support margin expansion. The company has guided for order inflows of INR200–250b in FY26 and ~INR300–350b in FY27, subject to the materialization of the bidding pipeline.
Valuation and view
* While execution of fresh orders may only reflect meaningfully from FY27, the company’s strong order inflow guidance, improving bid environment (less competition, tighter prequalification norms), and balance sheet strength provide visibility for sustainable growth.
* We expect GRINFRA to clock an 11% revenue CAGR over FY25-28, with an EBITDA margin in the range of 12-14%. Reiterate BUY with a revised SoTPbased TP of INR1,360.
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