HG Infra Engineering Limited saw its shares rise by 5% on September 10, 2024, following the announcement of a ₹781 crore order from the Ministry of Road Transport and Highways (MoRTH). This order, aimed at upgrading a six-lane road and elevated corridor on NH47 in Gujarat, helped the company end its six-day losing streak, putting it back in the spotlight for those investing in the stock market.
HG Infra's ₹781 crore order win
The company informed the exchanges that it received a Letter of Acceptance (LoA) from MoRTH for the upgradation of an existing six-lane road and an elevated corridor between Narol and Sarkhej Junction. The project covers a distance of 10.63 kilometres. It will be executed under a Hybrid Annuity Mode (HAM), which combines upfront payments with deferred payments linked to performance, offering a balance between risk and reward. This ₹781.11 crore project is expected to be completed in 2.5 years.
This order win is a significant boost for HG Infra, further strengthening its portfolio of infrastructure projects. The company has consistently proven its expertise in road construction, and this new contract adds to its growing list of high-value projects. This growth is one of the many reasons why investing in the stock market can be rewarding, especially in companies with a strong track record of securing government contracts.
Impact on HG Infra's stock performance
Following the order announcement, HG Infra's shares jumped by 5.42%, reaching an intraday high of ₹1,540 per share on the National Stock Exchange (NSE). This was a much-needed recovery after six consecutive days of decline. By mid-day, the stock was trading at ₹1,527, marking a 4.53% increase.
Financial performance
HG Infra Engineering's financial performance has been solid, which makes it a stock to watch for those considering investing in the stock market. The company's consolidated revenue from operations for Q1 FY25 increased by over 13% year-on-year (YoY), rising to ₹1,528 crore compared to ₹1,351.2 crore in Q1 FY24. However, sequentially, revenue fell by more than 10% compared to ₹1,708.3 crore in Q4 FY24.
Similarly, HG Infra's profit after tax (PAT) for Q1 FY25 rose by more than 8%, reaching ₹162.56 crore, compared to ₹150.38 crore in Q1 FY24. However, PAT dropped by over 14% compared to ₹190.03 crore in Q4 FY24. This shows that while the company has delivered growth, it has also faced challenges, likely contributing to the recent dip in its share price.
For investors eyeing the infrastructure sector, these financial results highlight the importance of staying informed and making decisions based on a company's long-term potential rather than short-term fluctuations. Investing in the stock market requires a balance of patience and strategy, especially when considering stocks like HG Infra that are involved in large, complex projects.
The road ahead for HG Infra
With this new order under its belt, HG Infra is well-positioned to continue growing. The infrastructure sector in India remains robust, with government initiatives aimed at improving road networks, highways, and urban infrastructure. As a key player in this space, HG Infra stands to benefit from these developments, making it a promising option for those investing in the stock market.
While the stock may experience short-term volatility, the company's strong financials, successful project wins, and expertise in the infrastructure sector make it a solid contender for long-term investment.
For android only