Multibagger HG Infra Stock Soars 5% After ₹716 Crore Central Railway Order – Should You Buy Now?

HG Infra Engineering, a company focused on infrastructure projects like construction and design, saw its stock rise 5% to ₹1,574 per share in early trading. This increase came after the company received a ₹716 crore order from Central Railway on Thursday.

The order involves building a new broad gauge (BG) railway line between Dhule (Borvihir) and Nardana, covering about 49.45 km. The project will be done under the Engineering & Procurement Contract (EPC) mode, according to the company’s filing.

This is HG Infra’s second big order this week. Earlier, the company won a ₹781 crore contract from the Ministry of Road Transport and Highways (MoRTH) on Monday to upgrade a six-lane road in Gujarat.

Strong Order Book

By the end of June, HG Infra’s total order book stood at ₹15,642 crore, which is three times its FY24 revenue. About 91% of these projects are from the Government of India, with the rest from the private sector. This gives the company revenue security for the next 2-3 years, with an expected growth rate of 16% from FY24 to FY26.

HG Infra is also looking to expand beyond roads and railway projects. In March, the company secured its first solar project worth ₹1,307 crore in Rajasthan. This project is a joint venture, where HG Infra holds a 65% stake.

Additionally, the company is exploring opportunities in the water segment to diversify further. Domestic brokerage Axis Securities believes this will help the company grow in the long term. HG Infra expects to receive ₹10,000–12,000 crore in new orders in FY25, with ₹8,000 crore from highway projects, ₹2,000 crore from railway projects, and ₹1,000 crore from solar and water projects. Over the next 2-3 years, the company expects 35-40% of its order book to come from non-road projects.

Strong Financials

For the quarter ending in June, HG Infra posted strong results. The company reported a revenue of ₹1,506 crore, an 18% increase from the previous year. It also posted EBITDA of ₹243 crore, up 19%, and APAT of ₹140 crore, up 18%. Its EBITDA margin stood at 16.2% in Q1 FY25, compared to 16.1% in the same period last year.

Wealth Creator

The company’s shares have gained 147% in less than two years and an impressive 727% in the last five years. In April, the stock saw its biggest monthly gain in three years, rising 30%. It continued to grow in May and July, with gains of 27% and 17% respectively. So far in 2024, the stock has given an 83% return to its investors.