Motilal Oswal Initiates Buy Call For This Construction Stocks, With A Rs. 2260 Target Price

Brokerage firm Motilal Oswal has given a buy call to the stocks of G R Infraprojects Ltd (GRIL), with a target price of Rs. 2260. The company has established itself as a leading road EPC player and has leapfrogged its competitors.

Target Price

The Current Market Price (CMP) of G R Infraprojects Ltd (GRIL) is Rs. 1899. Motilal Oswal has estimated a Target Price for the stock at Rs. 2260. Hence this company is expected to give a 19% return, in 1 year.

Stock Outlook
Current Market Price (CMP)	Rs. 1899
Target Price	Rs. 2260
1 year returns	19.00%

Company performance

GRIL's current order book stands at Rs. 158 b (excl. the L1 position of Rs. 12 b). GRIL's sales stood at Rs. 72.4 b, which is expected to grow to Rs. 85.3 b in FY 22. The company's EBITDA stood at Rs. 13.1 b, which is expected to grow to Rs. 15.3 b. The company's PAT stood at Rs. 7.8 b, which is expected to grow to Rs. 8.9 b. "The Roads sector has seen aggressive competition recently, and GRIL's focus on margins has led to a lower strike rate in winning orders. We expect GRIL to witness EPS growth of 16% over FY 21-24," Motilal Oswal reported.

Comments by Motilal Oswal

Motilal Oswal said, "Given its size and high-margin profile, GRIL needs to deliver a balancing act between topline growth and margins. We expect the diversification journey to be slow and steady as the company aims to build capabilities and focuses on replicating superior margins of 18%+ in new segments. Focus on cash flow generation and the balance sheet is the only mantra to survive across cycles as well as an enabler for growth over the long term." However, key risks include weak order flows from Government authorities.

About the company

GR Infraprojects is an integrated road EPC company with experience in the design and construction of various road/highway projects across 15 states in India and has recently diversified into projects in the railway sector. For example, one of the first road projects that we executed was for the Public Works Department, Rajasthan in 1997 with a Bid Project Cost of Rs. 26.50 million, whereas the project was recently awarded by NHAI, i.e. Vadodara Mumbai Expressway project in the state of Maharashtra.

(Also read:  Motilal Oswal Recommends This Banking Stock To Buy For 28% Return, Robust Digital Growth Beating The Pandemic)

Disclaimer

The above stock was picked from the brokerage report of Motilal Oswal. 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.