Buy This Recently Listed Mid Cap Infra Sector Stock For Target Price Of Rs 1,620: Axis Direct
[ad_1]
Stock Outlook
On NSE, today the stock of G R Infraprojects opened at Rs 1,360.60 apiece. The Current Market Price (CMP) is Rs 1,381.50. On 23 June 2022, the stock hit the 52 week low at Rs 1,078.85 and on 25 October 2021, the stock touched the 52 week high at Rs 2,267.65, respectively.
Returns over the past 5 years
The stock of the company in the past 1 week has gained roughly 1.18%, whereas, in the past 1 month, it gained nearly 5%. However, in the last 3 months and 1 year, the stock slid 0.66% and 12.15%, respectively. The stock was listed on the stock exchange on 19 June 2021. It has fallen 21.07% since it got listed on the exchange.
Robust Order Book; Diversification Strategy and Asset Monetization to Drive Growth
In FY22, G R Infraprojects reported operating revenue growth of 9.31% to Rs 7,919 Cr. The growth was largely contributed by the increase in the sales of services and products and the increase in other operating revenue. As of 31st March 2022, the company’s order book stands healthy at Rs 13,104 Cr. In FY22, it was awarded 10 projects with a combined order value of Rs 9,350 Cr. Including L1, the company’s total order book stands at Rs 19,613. Out of the 10 projects it won, eight projects are under HAM, one is the Metro project, and the final one is under the Power Transmission segment. The company believes the heightened competition in the road sector to taper off moving forward, providing more opportunities for the organized players to achieve decent and better margins than the unorganized ones. During the year, the company diversified into the Power Transmission Segment to augment the revenue stream apart from the road projects and expects to generate encouraging revenue levels in the coming fiscals.
Key Highlights
Total expenses inch up 11.8%: The company’s total expenses increased by 11.8% to Rs 6,638 Cr in FY22, led by higher costs of materials consumed, civil construction costs, employee benefits expenses, and other expenses. These factors lowered its EBITDA margin to 16.2% in FY22 from 18.1% in FY21.
Finance Costs declined by 9% YoY: The company’s finance costs declined by 9% in FY22 due to a decrease in interest on debentures, interest on mobilization advances, and interest on lease liabilities.
Optimal mix of BOT and HAM: Currently, the company has an optimal mix of One BOT Annuity and 22 HAM and One Power Transmission Project. Out of these 24 Projects, 8 are Operational, 8 are under construction, and the remaining 8 are awaiting the appointed date. Geographically, the operations of the company are spread over Sixteen States, which reduces its geographical concentration risk to a great extent.
Key Competitive Strengths
a) Excellent track record of completing complex projects under promised timelines.
b) Robust in-house design and engineering team with proven expertise.
c) Strong on-site project management ensuring operational efficiencies.
d) Timely delivery backed by the in-house supply chain management team.
e) Manufacturing units supported by backward integration.
f) Experienced and competent management bandwidth.
Strategies Implemented
a) Focused on sustainable growth through optimised resource utilisation.
b) Prudent bidding for big-ticket projects (especially BOT and HAM projects), deriving higher volumes and margins.
c) Accelerated project execution while increasing investments in equipment and assets.
d) Conducted regular training and upskilling of the workforce.
Growth Drivers
a) Opportunities under Prime Minister GatiShakti Scheme and NIP.
b) Multimodal connectivity between mass urban transport and railway stations.
c) Monetisation of assets through the infrastructure investment trusts route.
d) Introduction of electronic toll collection across highways.
e) Growing projects across power transmission and railways sectors.
Key Focus Areas moving forward
a) Continue to focus on expanding road EPC/HAM business.
b) Pursue other segments within the EPC space to further diversify business streams.
c) Maintain focus on technology and operational efficiency and enhance in-house capabilities.
d) Drive financial discipline while driving the strategy to monetise assets.
