Initiating the coverage of GR Infraprojects, domestic brokerage and research firm Axis Securities has pinned a target price of Rs 1,775 per share, implying a 23% up-move from today’s opening price of Rs 1,440 per share.
GR Infraprojects stock price has had a stellar run on the stock exchanges since its listing last year. The construction and engineering firm has rallied 72% from the upper end of the IPO price band so far and is expected to rally more. Initiating the coverage of GR Infraprojects, domestic brokerage and research firm Axis Securities has pinned a target price of Rs 1,775 per share, implying a 23% up-move from today’s opening price of Rs 1,440 per share. The brokerage firm said that GR Infraprojects is well-placed to capitalise on the opportunities emerging in the construction space.
23% upside potential
The company is an integrated Road EPC company having experience in the Design & Construction of various road/highway projects across 15 States in India. Axis Securities said that the overall outlook for the construction industry is robust on account of high government spending. “We expect the industry to grow at a CAGR of 6% over FY20-FY25,” they added. The brokerage firm believes that GR Infra’s high order book, better execution, and favourable industry tailwind will drive the company’s overall growth, moving forward. “We initiate coverage on GR Infraprojects with a BUY recommendation and value its EPC business at 15xFY24E EPS and HAM portfolio at 1x book value to arrive at a Target Price of Rs 1,775/share,” they said.
Along with GR Infraprojects, Axis Securities also has a buy rating on its peers such as KNR Construction, PNC Infratech, H G Infra Engineering, and PSP Projects.
Order book robust
GR Infraprojects has a strong and diversified order book position, which indicates a sustainable revenue growth visibility for the next 2 years. “Strong order book of Rs 16,692 crore along with the government’s focus on developing road infrastructure augurs well for the company,” Axis Securities said.
The firm’s order book has grown at an impressive CAGR of 24% over FY17-FY21 and the management expects robust order inflow moving forward. GR Infraprojects has already submitted a bid for road projects and Metro projects aggregating to Rs 66,000 crore. Further, the diversification into Power transmission is seen as a move that de-risks the business.
Proven track record
GR Infraprojects has over 25 years of experience in the road sector. Axis Securities said that since 2006, GR Infraprojects has successfully executed over 100 road construction projects spread across 15 states and is currently executing 27 projects. “With strong execution credentials and backed by its financial and technical qualifications, GRIL has been able to qualify for bidding large projects and can bid for a single project up to a ticket size of Rs 10,000 crore,” they added.
Well position with healthy financials
GR Infra’s revenue has grown at a healthy 23% CAGR over FY17- FY21 to Rs 7,244 crore in FY21 from Rs 3,182 crore in FY17. Its EBITDA margins remained stable between 17-18% during this period, making it well-positioned in the construction sector. The company delivered Revenue/EBITDA/APAT growth of 33%/32%/26% CAGR over FY18-FY21.