Two Small Cap Infra Stock To Buy, Add For Up To 46% Returns As Suggested By HDFC Securities

HDFC Securities is bullish on two small-cap Infra sector stocks suggesting "Buy", and "Add" for a healthy return of up to 46%. These two small-cap stocks are HG Infra Engineering and J Kumar Infraprojects. The stocks have given decent returns over the past 3 years. Here are the details about the stocks:

1. HG Infra Engineering Ltd.

HDFC Securities recommends "Buy" with a target price of Rs 1,017/share, implying an upside of up to 39% from its current level. The stock last traded at Rs 734.55/share. The stock rallied 6.83% on Friday.

The stock gave 8.76% in 1 week, and 9.06% in 1 month, respectively. In 1 year it gave 15.92% and in 3 years it gave 187.66%, respectively. It has delivered 174.34% since 9 March 2018, the listing date. It has a market capitalisation of Rs 4,787.14 crore.

 

1.1. HG Infra Engineering - "Buy" for a target price of Rs 1,017/share

According to the brokerage, HG Infra (HG) reported revenue/EBITDA/APAT at INR 11/2/1bn (missing)/beating our estimate by (1.9)/2/1.4% resp. It expects FY23 revenue growth of 25% plus (INR 46bn) with an EBITDA margin of 15% plus on the back of a robust OB of INR 110bn. It reported an early completion bonus of INR 160mn in Q3FY23 and expects INR 45mn in Q4FY23. The order inflow (OI) in 9MFY23 was INR 60bn with another INR 30-40bn expected in Q4FY23. It is L1 in its first non-highway project i.e. Delhi Metro project worth INR 4bn with the scope of work including the construction of an elevated viaduct and four elevated stations. It expects a margin of 14% from this project and a margin of 15% plus at the aggregate level, going forward. The company plans to monetise four HAM projects at a ~40% premium to book value of INR 3.5bn invested equity by Sep'23. "Given robust order inflow and strong execution, we maintain BUY, with an increased TP of INR 1,017 (14x Dec-24E EPS) to factor in a higher level of execution and better EBITDA margin," the brokerage has said.

 

 

2. J Kumar Infraprojects Ltd. (JKIL)

The brokerage suggests "Add" the stock with a target price of Rs 387/share, implying an upside of up to 46% from its current level. The stock last traded at Rs 266.60/share. The stock declined 2.27% as compared to its previous close.

The stock surged 3.09% in 1 week, and declined 2.68% in 1 month, respectively. The stock surged 49.86% in 1 year and 82.29% in 3 years, respectively. However, it declined 15.67% in 5 years. It has a market capitalisation of Rs 2,017.24 crore.

 

 

2.1. J Kumar Infraprojects - "Add" for a target price of Rs 387/share

According to the brokerage, JKIL reported an in-line quarter, with revenue/EBITDA/APAT at 10.6/1.5/0.7bn, marginally beating our estimates by 1.9/2/2.6%. JKIL FY23 revenue guidance now stands at the higher end of the INR 40-42bn range to INR 42bn, with an EBITDA margin of 14-15%. The order inflow (OI) of INR 16.9bn in 9MFY23 took the order book (OB) to INR 112bn (~3.2x FY22 revenue). JKIL reiterated its OI guidance for FY23 at INR 50bn, of which 33.8% of orders were achieved in 9MFY23. The balance sheet continues to be robust, with gross debt at INR 4.8bn (D/E at 0.20x). With INR 1.1bn of Capex incurred in 9MFY23, JKIL increased FY23 Capex guidance to INR 1.5bn (+INR 0.5bn). "The quarter's outperformance on execution, order inflow and balance sheet is largely in line with our annual estimates; we continue with our valuation multiple at 9x. We maintain ADD, with an increased target price of INR 387/sh (9x Dec-24E EPS, rolled over)," the brokerage has said.

 

Disclaimer

The stocks have been picked from the brokerage reports of HDFC Securities. 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 consult with certified experts before making any investment decision.