H.G. Infra Engineering (HGINFRA IN) – Q4FY26 Result Update – Inflow & deleveraging key; execution risks persist – ACCUMULATE

HG Infra reported a weak Q4FY26, with standalone revenue, EBITDA and PAT declining ~31%, 55% and 55% YoY, respectively, due to slower project execution and subdued order inflows during FY26. Management expects a recovery from Q2FY27, supported by improving execution, claim settlements and ramp-up of recently awarded projects, while guiding for FY27 revenue of ~INR 65 bn (+14% YoY) and EBITDA margins of ~14%. The company has also outlined a deleveraging roadmap, with standalone debt expected to decline from ~INR 16.3 bn to INR 8–10 bn by H1FY27, aided by HAM asset monetisation, solar project debt drawdowns and working capital normalisation. Order book visibility remains healthy at ~INR 157 bn (post Q1FY27 wins), while diversification into transmission, BESS and renewable energy continues to broaden the business mix beyond roads. That said, we remain more conservative than management and factor in execution of INR 60 bn/INR 69 bn and EBITDA margins of ~12% over FY27/FY28, reflecting cost inflation and an increasing share of lower-margin projects. At ~10x FY28E EPS and ~1x book value, valuations are approaching COVID-era lows. Retain Accumulate rating with SOTP base TP of INR 670, valuing EPC at 8x FY28 EPS and investments at BV. Key catalysts for re-rating include stronger order inflows and successful asset monetisation leading to a meaningful reduction in debt, while execution is likely to remain subdued through FY27E.