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Research report of HG INFRA LTD
HG INFRA LIMITED
Overview :-
The Company was incorporated as “H.G. Infra Engineering Private Limited” on January 21, 2003, as a private limited company under the Companies Act 1956, at Jodhpur. It’swas changed to “H.G. Infra Engineering Limited” and the RoC issued a fresh certificate of incorporation on June 8, 2017.
Mr. Harendra Singh, aged 54 years, is the Chairman and Managing Director of our Company. He holds a bachelor’s degree in engineering (civil) from Jodhpur University. He has been on the Board since the incorporation of our Company, and was reappointed for a period of five years with effect from May 15, 2017. He has 27 years of experience in the construction industry. He has been awarded by the Indian Achievers Forum for his outstanding achievement in business and social service, on August, 5 2016 and on November 11, 2016.
As of 1st Quarter 2022, the company has orderbook of ₹7040 Cr
About Company :-
HG Infra is an infrastructure construction, development and management company with extensive experience in our focus area of road projects, including highways, bridges and flyovers. Our main business operations include (i) providing engineering, procurement and construction (“EPC”) services on a fixed-sum turnkey basis and (ii) undertaking civil construction and related infrastructure projects on item rate and lump sum basis, primarily in the roads and highway sector.
The company has accreditations, such as the ISO 9001:2015, ISO 14001:2004, OHSAS 18001:2007 certification for quality management systems, environment management systems, and health and safety management systems, respectively, issued by LMS Assessment Services Private Limited.
Promoters have an experience of more than two decades in the construction industry. Prior to the incorporation of our Company, our Promoters were associated with M/s Hodal Singh Giriraj Singh & Co., Jodhpur, a partnership firm involved in the construction business which was taken over by our Company in 2003.
The promoter & management team have an experience of over 18 years in construction and development of major infrastructure road projects including highways, bridges, flyovers and other related infrastructure activities, across various states in India covering Rajasthan, Uttar Pradesh Haryana, Uttarakhand, Maharashtra and Arunachal Pradesh.
Their public sector clients include NHAI, PWD, MES, Jaipur Development Authority and MORTH.
The company have also executed road construction contracts as a sub-contractor for our private sector clients such as Tata Projects Limited and IRB Modern Road Makers Private Limited.
The company has one of the few players in India to own a large fleet of modern construction equipment including HMPs, CBPs, crushers, excavators, loaders, dozers, sensor pavers and transportation vehicles, which meet most of the requirements for our ongoing projects.
Of the total order book, outstanding as on 31 March, 2021, 38% is from Rajasthan, 28% from Telangana, 11% from Andhra Pradesh, 10% from Haryana, 10% from Uttar Pradesh and 3% from Maharashtra.
As of August 2021, the company has around 10 projects in Rajasthan, 7 Projects in Maharashtra, 4 Project in Haryana, 3 projects in Telangana, 1 in UP, & 1 in AP. Source – Investor Presentation July 2021.
Risk associated :-
Delays in the acquisition of private land or rights of way, eviction of encroachments from government owned land by the Government or resolution of associated land issues may adversely affect company’s timely performance of our contracts and lead to disputes and losses.
One of the Group Company, H.G. Infra Toll Way Private Limited is engaged, and is authorized by its constitutional documents to engage, in business activities which are similar to those undertaken by the Company, which may result in conflict of interest.
Delay in acquisition of land may delay in completion of project and may also affect financials in short term.
Floods or other natural cause may adversaly affect company’s operation and may lead to loss of equipments and resources.
Not payment of loans on time may delay Company’s projects and leading to worsen financials.
The projects are mostly awarded by government and any disturbance in govt either political or general may result in low orderbook and slow growth of the company.
The company employs a huge number of workers and overseers, Any strike created by them may lead to slowdown of operation and delay in completion of projects.
Key trigger for growth :-
Economic Growth
Preference towards roads in freight traffic
Increasing vehicular and passenger traffic
E-commerce logistics, a growth driver for road freight
Improved vehicle sales
Increased private participation
Policy changes fueling growth
Make in India to boost traffic
Financials :-
Revenue for FY2021 was 2602 Cr up from 2217 cr, 17.3% up YOY and For Q1 FY 2022 was 941 Cr down by 10.8% QOQ and up by 25% YOY.
PAT for FY2021 was 237 Cr up from 167 Cr, 42% up YOY and For Q1 FY2022 was 101 Cr down by 9% QOQ and up by 48% from last same quarter year.
EBITDA margin is up by 60 Basis points to 16.2%
PAT margin grew by 80 Basis points To 8.3%
As of 1st Quarter 2022, the company has orderbook of ₹7040 Cr.
Debt to equity is 0.28 as of FY2021.
As increasing number of projects are Being awarded each year, so a good Growth in financials is expected in near Future.
Debt is considerably low, and that’s a Very good sign of a healthy financials.
The company is very specifically focused In particular segment of infrastructure Developments, like – Expressway, Roads, Bridges, and state road construction. This Helps it in easy managing of resources & Giving Better results as compared to a diversified infa company.
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