Buy Two Small Cap & Mid Cap Stocks For Gains Up to 30%, Says ICICI Direct

ICICI Direct has assigned a "Buy" tag on two stocks from the Infrastructure & Construction sectors, The name of these two stocks are HG Infra Engineering & GR Infraprojects (GRIL). According to the brokerage, the stocks with the given target price are likely to give returns of up to 30%. The time period for the potential upside is 12 months with the given target price. Here are the details of the stocks.

HG Infra Engineering Limited

HG Infra Engineering is a Jaipur (Rajasthan) based infrastructure company having primary focus on roads and allied sectors. Additionally, the company is actively looking to diversify itself by targeting into railways, airport and water infra segments. It is a small-cap infrastructure sector company with a market cap of Rs 3,707.91 crore. 

Current Market Price, Target Price & Potential Returns 

ICICI Direct in its recent report placed a "buy" call on Infra Engineering Limited for potential gains up to 23% with the target price of Rs 700 per share by the brokerage. The current market price (CMP) of HG Infra stock stood at Rs 568.95 per share on NSE, gaining 4.93% compared to the previous close.

Returns

In the past 1 week, the stock has fallen 2.16%, whereas, in 1 month it gained 1.34%. Over the past 1 year, it fell by 18.49%. In the past 3 years, it gave a multibagger return of 134.91%. The stock was listed on 9 March 2018 and since its listing it has given 112.49% multibagger returns to shareholders. 

HG Infra's share price has doubled over the past four years (from ~Rs 270 in March 2018 to Rs 542 levels in November 2022). 

Q2FY23 Results

HG Infra reported a mixed-bag performance during Q2FY23. Standalone revenue improved 0.3% YoY to Rs 752.1 crore impacted by delay in receipts of appointed date in certain projects and prolonged monsoons. EBITDA margin was elevated at 16.1% (down 19 bps YoY) aided by softening in commodity prices and better project mix. Effectively, EBITDA at Rs 120.8 crore, was down 0.9% YoY. PAT de-grew 7.5% YoY at Rs 64.6 crore.

GR Infraprojects Limited (GRIL)

GR Infraprojects (GRIL) is a leading player in the roads and highways sector having overall an order book size of Rs16,222 crore.  The company delivered 26.6% revenue CAGR during FY16-22, well complemented by 33.6% EBITDA CAGR and 39% PAT CAGR. It is a mid-cap construction sector company with a market cap of Rs 11,046.24 crore.

Current Market Price, Target Price & Potential Returns

ICICI Direct has assigned a buy call to GRIL for a target price of Rs 1,475 per share. According to the brokerage's given target price, the stock is likely to surge up to 30% from its current level. The Current Market Price (CMP) of GR Infraprojects stood at Rs 1,142.45 apiece on NSE, 1.94% down as compared to its previous close. 

Returns

 

The stock has fallen 6.02% over the past week and 6.25% over the past month. It has fallen 2.85% over the past three months. Whereas, it gave a 44.24% negative return over a year. The stock has given a negative return on investment of 34.61% since its listing on July 19, 2021.

GRIL's share price has de-grown ~33% over the past one and half years (from ~Rs 1,730 in July 2021 to Rs 1,165 levels in November 2022). 

Q2FY23 Results

GRIL reported a weak set of Q2FY23 numbers.  Standalone revenue grew merely by 4.6% YoY to Rs 1,777.2 crore impacted by depleted executable order book position and prolonged rainy season  EBITDA margin moderated to 14.6% (down 172 bps YoY) due to higher input cost, elevated level of CSR expense and higher provisions. Effectively, EBITDA at Rs 260 crore, was down 6.5% YoY  PAT was at Rs 164.3 crore (up 0.8% YoY).

Disclaimer

The stocks have been picked from the brokerage report of ICICI Direct. 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 making any investment decision.