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Buy Construction Stock, Sitting On Rs 156 Bn Order Book, For Greater Return: Motilal Oswal

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Motilal Oswal, in its latest report, has recommended investors to buy Construction sector stock, G R Infraprojects Ltd with a target price of Rs 1510. The current market price of the stock is Rs 1226 apiece.

 

According to Motilal Oswal, "GRINFRA is sitting on an order book of INR156b (2x FY22 revenue). Though it has not bagged any major orders in FY23, its tender pipeline remains robust. It is targeting order inflows of INR150b in the rest of FY23. A Metro project worth INR5.9b, where it was L1 for some time, was recently annulled by the authorities." If you buy the stock at current market price, you will get 23% potential return. Check key takeaways below:

1. G R Infraprojects Stock Performance & Return

1. G R Infraprojects Stock Performance & Return

The last trading price of the stock is Rs 1226 after an intraday gain of 0.67%. The stock's 52-week high is Rs 1978 apiece and 52-week low is Rs 1074 apiece, respectively. The company has a market capitalisation of Rs 11,862 crore. The stock has declined 31% in last 1-year, 10% in last 6-months, and 8% in last 3-months. It has gained over 1% in last 1-week.

2. Order Book Decent Despite Muted Inflows; Strong Tender Pipeline
 

2. Order Book Decent Despite Muted Inflows; Strong Tender Pipeline

Of the INR150b of projects being targeted by GRINFRA, 85-90% of projects are from the Roads segment and the rest from the Power T&D and Metro space. GRINFRA can win decent projects and enhance its order book. The open tender pipeline of NHAI is robust (over INR500b) and is to be awarded over the next few months.

3. Segmental Diversification At Play; Focus Is On Monetizing Of Existing Assets

3. Segmental Diversification At Play; Focus Is On Monetizing Of Existing Assets

GRINFRA has diversified into segments like Metro and Power T&D, which enhances the potential market opportunity. In Power T&D, it aims to complete the EPC portion of the project and then monetize the asset. It aims to float the trust by FY23-end, which will enable it to bid for additional projects ahead.

4. Valuation

4. Valuation

According to Motilal Oswal, "The order pipeline should see decent inflows in 4QFY23. GRINFRA's entry into new segments such as power T&D enhances the potential market opportunity. Given its current order book, we expect GRINFRA to clock 11% revenue growth over FY22-24, with EBITDA margin in the 16-17% range. We retain our Buy rating with a SoTP-based TP of INR1,510."

5. G R Infraprojects About

5. G R Infraprojects About

G R Infraprojects Limited is one of the fastest growing organizations in the Indian infrastructure sector, with over 25 years of legacy. Its primary business operations are broadly segmented into three categories namely, Construction, Operation & Maintenance, and Manufacturing & Fabrication, according to its official website. 

Disclaimer

Disclaimer

The stock has been picked from the brokerage report of Motilal Oswal. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.

Story first published: Friday, December 9, 2022, 20:54 [IST]
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