HG Infra Engineering shares soar after securing massive Rs 716cr railway deal, investors rejoice

HG Infra Engineering Limited’s shares experienced a remarkable surge following its success in securing a substantial ₹716 crore project from Central Railway. This win broke a two-day decline in the company’s stock, driving it up by around 5% to trade at ₹1,579 on the Bombay Stock Exchange. The railway project involves constructing a 49.45-kilometre broad gauge line between Dhule (Borvihir) and Nardana in Maharashtra, adding significant value to the company’s portfolio.

Big win boosts hg infra’s stock performance

The news of the project win created an immediate impact, lifting HG Infra Engineering’s stock price by 4.11% to ₹1,564 from its previous close of ₹1,502.30. The company revealed that the project would be completed under the Engineering, Procurement, and Construction (EPC) mode within a 30-month deadline. This project is strategically important as it diversifies the company’s portfolio beyond its core road infrastructure projects, aligning with its broader growth objectives.

Earlier this week, HG Infra also secured another major contract worth ₹781 crore from the Ministry of Road Transport and Highways for the development of a 10.63 km stretch of NH-47 in Gujarat. This project includes the construction of an elevated corridor and follows the hybrid annuity model (HAM) with a completion timeline of 2.5 years.

Strong financial results and diversification efforts

HG Infra Engineering has been demonstrating strong financial growth, underpinned by robust project wins. The company reported a consolidated net profit of ₹162.56 crore for the first quarter of FY25, up from ₹150.38 crore in the same period last year. Revenue from operations also climbed to ₹1,528 crore, reflecting its growing foothold in the infrastructure sector. Additionally, the company is actively diversifying its portfolio to include projects outside the road and railway sectors.

In March 2024, HG Infra secured its first solar power project valued at ₹1,307 crore in Rajasthan. This move represents the company’s strategic shift toward sustainable infrastructure and renewable energy solutions, a growing trend in global infrastructure development. It is also looking to tap into the water infrastructure segment, which is expected to bolster its growth in non-road projects significantly.

Robust order book and market outlook

At the end of the June quarter, HG Infra’s order book stood robust at ₹15,642 crore, offering substantial revenue visibility for the next two to three years. Notably, 91% of the projects in its order book are from government contracts, which are considered relatively more secure. This strong order book is anticipated to drive a revenue growth rate of 16% compound annual growth rate (CAGR) from FY24 to FY26, driven by new projects in highways, railways, solar, and water sectors.

The company expects to secure new orders worth ₹10,000–12,000 crore in FY25, with significant contributions from highway, railway, solar, and water projects. With its ongoing diversification strategy, HG Infra is looking to have 35-40% of its order book in non-road projects over the next two to three years, reflecting a strategic shift toward a more balanced and resilient business model.

Expert opinion: strong fundamentals and strategic diversification

Analysts note that HG Infra Engineering’s recent project wins and diversification into new segments such as renewable energy and water infrastructure reflect a robust growth strategy. The company is well-positioned to capitalise on India’s expanding infrastructure development needs, especially with the government’s continued push for better connectivity and sustainable projects. HG Infra’s efforts to expand its portfolio beyond road construction could enhance its resilience against sector-specific downturns, providing a strong base for sustained growth.

HG Infra’s strategic shift to sustainable growth

HG Infra Engineering’s recent success in securing high-value projects from both Central Railway and the Ministry of Road Transport and Highways demonstrates its competitive strength and strategic agility in the Indian infrastructure market. As the company continues to diversify into new sectors such as renewable energy and water infrastructure, it is likely to see continued interest from investors looking for companies with strong growth potential and diversified portfolios.