My views on "why it might be trading at low PE? "
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Their orderbook is not diversified enough. Till last year, it was completely road orders. However, recently they have won 3 rail orders (10% of total order book)
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Their orderbook has a 5k cr. Contract of Ganga express highway from ADANI- apart from that order, their orderbook is about 6-7k cr. In my view market wants to see more order inflow from various field.
Their topline this year will be about 5500 Cr. ( as per management guidance ) & orderbook is at 11.5k cr. at present, which translates Order book/ sales of 1.7 ( if we consider 25% topline growth ). Which is relatively low as compared to peers.
Having said that, HGINFRA used to trade at single digit PE till early 2021 ( at 6-7 PE ). But due to its exceptional growth performance, high EBIDTA margins ( due to selective order wins of better margins ) and great controls on working capital / Balance sheet in last 3 years, market has rewarded it with double digit PE.
Going forward, their orderbook, their diversification in sectors will be key monitorables. Even today during concall, management reduced their orderbook guidance from 8-9k cr to 7-8k cr.
If they manage to get 8k Cr. order this year ( and diversified too ) then its orderbook/ sales will stand at 2.5 & in that case, market may reward this company further.
Disc: Invested since 3 years.
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