HG Infra Engineering, an Indian road infrastructure development company, has become a smallcap multibagger stock, delivering an impressive 300% return to its investors over the last 5 years. Notably, the stock has made a remarkable recovery of over 78% from its 52-week low of Rs 532, which it hit on November 10, 2022.
The company’s financial performance for the quarter ended June 2023 was impressive, with a 37% rise in net profit, reaching Rs 1,504 crore compared to Rs 1,094 crore in the same period last year. The revenue from operations also saw a significant jump of 22%, reaching Rs 13,512 crore during the quarter from Rs 11,059 crore in the previous year.
Centrum Broking, a leading brokerage firm, has a ‘Buy’ rating on HG Infra’s stock, with a target price of Rs 1,283, indicating an upside potential of over 35% from the closing price of Rs 947.60 on Thursday.
The company’s strong execution in its order book, stable margins, and healthy balance sheet are expected to continue the positive trend. HG Infra’s order book stood at Rs 116.7 billion as of June 30, 2023, with highway projects constituting 89% of the total, while the rest came from railways and metro segments. Hybrid Annuity Model (HAM) projects constituted 47% of the order book, and private projects, including those by Adani, constituted 30%.
The management has indicated that it is likely to receive the necessary approvals for the sale of four HAM assets this month, and the deal is expected to be concluded soon.
The stock’s technical analysis also reveals a positive outlook. The recent breakout above the level of 890 has strengthened the stock’s structure. Although it currently faces resistance around its all-time high, the stock remains strong with significant upside momentum, hovering above all its Exponential Moving Averages (EMA).
While the upside zone of 980-1000 restricts its upward march, the zone of 890-900 is likely to provide support in case of any downturn.
Final Words, HG Infra Engineering has shown remarkable growth and performance, making it an attractive prospect for investors looking for potential multibagger opportunities in the smallcap segment of the market. However, as with any investment, thorough research and careful consideration of the company’s fundamentals and future prospects are essential before making any investment decisions.
