GR Infraprojects shares extend gains to 6th straight day; here's what's keeping investors excited

GR Infraprojects shares continued to rise for the sixth session in a row on Wednesday, after the infrastructure company, through its wholly-owned subsidiaries, bagged deals to the tune of Rs 1,457 crore from the National Highways Authority of India (NHAI). The GR Infraprojects stock rose by as much as 48.85, or 3.8 per cent, to Rs 1,335 apiece on NSE.

GR Infraprojects subsidiaries GR Belgaum Raichur (Package‐5) Highway and GR Belgaum Raichur (Package‐6) Highway executed a concession agreement with the highways authority on Tuesday, involving highway projects worth Rs 1,457 crore, according to a regulatory filing.

As part of the agreement, GR Belgaum Raichur (Package‐5) Highway and GR Belgaum Raichur (Package‐6) will undertake certain construction activities on the Belgaum-Hungund-Raichur section of the National Highway (NH) 748A at bid project costs of Rs 716.5 crore and Rs 740.8 crore, respectively. 

Both projects are in a hybrid annuity mode (HAM)—such projects involve a fixed payment for a certain period followed by variable amounts—with a completion period of 730 days and an operation period of 15 years.

GR Infraprojects shares finished the day with a gain of Rs 4.3, or 0.3 per cent, at Rs 1,290.4 apiece on NSE. 

What analysts make of GR Infraprojects

GR Infraprojects' order book has grown sharply over the past few quarters, ICICI Securities pointed out. With robust order inflow, worth Rs 15,000 crore in the financial year 2022-23 and Rs 1,800 crore in the quarter ended June 2023, the infrastructure company's order book stands at a healthy Rs 26,800 crore as of June 2023, according to the brokerage, which has a 'buy' call on the stock with a target price of Rs 1,621 apiece. 

ICICI Securities believes the execution of projects is poised to pick up at GR Infraprojects, given its strong order inflow and book-to-bill ratio of 3.4 times. 

"Given the order build-up and stable input price environment, we believe, revenue may grow at a CAGR of 12 per cent over FY23-FY25E to Rs 10,100 crore, EBITDA may grow at a CAGR of 16 per cent to Rs 1,600 crore with margin expansion of 90 bps and PAT may grow at a CAGR of 16 per cent to Rs 1,000 crore," the brokerage said, in a research report dated August 13. 

Its target price implies a 26 per cent upside in the stock from its previous close.

Some analysts are of the view that the company's order pipeline from the NHAI needs to pick up. The company's inflows appear to be weak given its guidance of Rs 20,000 crore for the financial year ending March 2024, Vishal Periwal, Head Institutional Research at IDBI Capital Markets, told Zeebiz.com. 

"GR Infraprojects' outlook is hinging upon a pickup in orders and also on orders from sectors other than roads," he added. 

Meanwhile, Zee Business Analyst Kushal Gupta gave an intraday 'buy' call on GR Infraprojects with a target price of Rs 1,310 apiece. He suggests placing a stop loss at Rs 1,265. 

GR Infraprojects shares

The GR Infraprojects stock has risen 11 per cent so far in 2023, outperforming a 6.8 per cent gain in the headline Nifty index.

What does GR Infraprojects do?

Rajasthan-based GR Infraprojects is an infrastructure company catering to a host of construction activities in areas such as highways, bridges, railways and tunnels. Its primary business operations are divided into four main categories: 

• EPC and project management services for Roads and highways, bridges, airport runways, railways, metros, power transmission, and tunneling
• Development, operations and maintenance of roads and highways in build-operate-transfer (BOT) and hybrid annuity model (HAM) modes
• Manufacturing activities for bitumen processing, thermoplastic road-marking paint, road signage, and electronic equipment
• Fabrication of galvanised metal crash barriers and overhead equipment (OHE) masts

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