1 Maharatna & 1 Multibagger Stock To Buy Now For Strong Surge In 1-Year

The domestic brokerage firm ICICI Securities has placed a buy call on the shares of Gas Authority of India Limited (GAIL). The shares of this maharatna company are now trading at a market price of Rs 148.35 per share as of 8 Feb, 9:08 am IST and the brokerage has set a target price of Rs 180 in a time frame of 12 months. The brokerage, on the other hand, has a buy call on the shares of HG Infra Engineering Ltd. This multibagger stock has climbed by 139.81 percent in the last year, and it is currently trading at a market price of Rs 683.95 per share as of February 8, 9:16 IST.

Gail (India)

ICICI Securities has said in a report that "Gas trading outlook remains positive in the near term taking into account current LNG price trend. Transmission volume is also expected to pick up steadily with the commissioning of industries/fertiliser plants. We maintain our BUY rating on the stock. We roll over valuations to FY24E and value Gail at Rs 180/share based on SoTP method."

Q3FY22 results of GAIL according to the brokerage

• Gail's results were better-than-expected on all fronts.
• Revenue was up 66.7% YoY to Rs 25769.8 crore (estimate:Rs 23186.5 crore).
• While LPG/LLH performance was weaker than anticipated, all other segments- gas transmission, gas trading and petchem reported better than expected profits.
• Subsequently, EBITDA was Rs 4228.1 crore, up 120.3% YoY (our estimate: Rs 3590.9 crore). Reported PAT was at Rs 3288 crore, up 121.1% YoY (our estimate: Rs 2500.8 crore).

Key investment rationale for GAIL as per ICICI Securities

• Gas transmission volume is expected to report steady growth, going ahead.
• Gas trading is expected to report healthy gains in the near term due to favourable spot LNG price trends.
• LPG & petchem to report healthy profitability on account of higher realisation.

HG Infra Engineering

ICICI Securities has noted that "HG Infra's share price has grown 2.4x over the past four years (from ~Rs 267 in March 2018 to Rs 630 levels in February 2022). We maintain a BUY rating on the company. We value HG Infra at a target price of Rs 885."

Q3FY22 results of HG Infra as per ICICI Securities

• HG Infra reported decent set of numbers during Q3FY22.
• Standalone revenue improved 24.7% YoY to Rs 915.6 crore, backed by its strong executable order book position, pick-up in execution, and receipt of appointed date in most of its projects.
• EBITDA was at Rs 145.2 crore, up 22.9% YoY, with a margin of 15.9%.
• PAT was at Rs 88.9 crore (up 35.6% YoY).

Key investment rationale for HG Infra as per the brokerage

• HG is likely to be one of the major recipients of thriving roads, railways and water supply 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 19.9% topline CAGR over FY21-24E.
• The current order mix with built-in raw material price variation clauses in most of its contracts provides margin sustainability at ~15.5-16%.
• Double-digit return ratios and lean balance sheet position.

Disclaimer

The stocks have been picked from the brokerage report of ICICI Securities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.