HG Infra stock downgraded to Hold by ICICI Securities on order book concerns

Published 18/08/2025, 11:06
HG Infra stock downgraded to Hold by ICICI Securities on order book concerns

Investing.com - ICICI Securities downgraded HG Infra Engineering (HGINFRA:IN) from Add to Hold and lowered its price target to INR1,000.00 from INR1,288.00 on Monday.

The downgrade comes as HG Infra faces challenges with its order book, which currently stands at INR147 billion (2.2x TTM revenues), with INR31 billion still awaiting appointed dates. The road sector, a key business segment for the company, has experienced soft order awarding for the past two years.

HG Infra has attempted to diversify by entering the solar and battery storage sectors, securing INR50 billion in orders. The research firm noted concerns about the company’s lack of execution track record in these new segments and heightened competition from established players.

Financial performance has shown strain, with Q1 EBITDA margin decreasing 240 basis points year-over-year to 13.8%, while profit after tax fell 10% to INR1.3 billion. Despite these challenges, management maintains its fiscal year 2026 guidance of 16% execution growth and 15-16% margins.

ICICI Securities acknowledged some positive developments, including HG Infra’s successful monetization of five HAM assets at attractive valuations, but emphasized that an improved order book remains essential for better earnings performance.

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