G R Infraprojects: Targeting faster growth beyond FY24

15 Dec 2023 , 11:07 AM

Recommendation: Add; Target Price: Rs 1269

 

Analysts of IIFL Capital Services hosted the management of GR Infra Projects for investor meetings. Mgmt expects the awarding of highway projects worth Rs500-600bn over the next four months and over Rs1,500bn in FY25. The company is targeting wins of ~Rs80bn in H2 from Highways, Ropeways, Tunnelling and Railway segments, with a right balance between growth and profitability. The long-delayed InvIT for the initial set of seven HAM assets is targeted for listing in Q4FY24 and will provide a rvehicle for churning the current portfolio of 31 HAM assets. At CMP, the stock is trading at 10.6x adj. FY25 PER. Analysts of IIFL Capital Services retain ADD with TP of Rs1,269. 

Focussed on order wins over next four months: 

Management indicated that the leadership and team change at NHAI is now done and settled; and that the awards should pick up over the next four months before central elections. This would be supported by a large pipeline of projects, where RFP’s have been floated and pre-bid activities are in progress or are complete. The company expects awarding for Rs500-600bn and over ~Rs1,500bn in FY25. HAM model with a 40% grant during construction should continue in FY24, but there is a possibility of a lower grant of 20% starting FY25. 

Targeting faster growth beyond FY24…: 

Apart from Highways, the company sees large opportunities in Ropeways, Tunnelling, Railways and MMLP segments; and has built up capabilities to bid for and execute projects in these segments. It is targeting an order-book share of 25% from these segments vs 16% currently, without compromising on margin profile for the EPC business, with sustainable Ebitda margin target of 14-15% over medium term. 

…supported by steady monetisation of HAM portfolio: 

Post compliance with the revised regulation, the company is targeting public listing of its InvIT with seven operational HAM assets in Q4FY24. This would provide a ready vehicle for steady churn of HAM portfolio (31 projects), and will support more focussed bidding for new HAM projects and BOT ropeway projects.