G R Infraprojects Ltd – Research Summary

CMP (Rs) =  1350 (as on 01/09/2022)

High/Low (Rs) (52 Weeks) = 2277/1074

Market cap (Cr) =  13392

Avg. daily vol. (6m) Shrs.=  58,984

No. of shares (Cr) =  9.6

India’s infrastructure sector is evolving rapidly and key trends demonstrate positivity and optimism. The Government of India is also gradually increasing its spending on infrastructure through budgetary and extra-budgetary support.

The roadmap for the industry over the next few years appears to be firmly in place. However, much will depend on the proper allocation of funds, the achievement of targeted short-term goals and the implementation mechanism in place.

GR Infraprojects Limited – Established in 1995, GR Infraprojects Limited is an integrated road engineering, procurement and construction (“EPC”) company with rich experience in designing and constructing various road and highway projects in 16 states and one Union Territory in India. The company has also recently diversified into rail/metro and power transmission projects.

To date, the company has an optimal combination of 1 BOT annuity and 22 HAM and 1 power transmission project(s). Out of a total of 24 projects, 8 are in operation, 8 are under construction and the remaining 8 are waiting for a set date.

Operating income rose to Rs 7,919 crore in FY22 from Rs 7,245 crore in FY21, registering a growth of 9.31%. The growth was mainly due to an increase in sales for services and products and an increase in other operating income.

The company’s total expenses rose by 11.83% to Rs 6,638 crore in FY22 from Rs 5,934 crore in FY21.only partially offset by lower changes in inventory of finished goods and goods for trading.

Employee benefits expense increased by 28.93% from Rs 586 crore in FY22 to Rs 455 crore in FY21. This was due to increase in salary, gratuity, pension fund and other funds and expenditure on employee welfare.

Competitive strengths

a) Excellent results in completing complex projects within the promised deadlines;

b) Robust engineering team with proven expertise and inhouse designs ;

c) Strong on-site project management ensuring operational efficiency;

d) on-time delivery supported by an internal supply chain management team;

e) production units supported by backward integration;

f) Experienced and competent administration bandwidth.

Finance costs down 9% YoY: The company’s finance costs fell 9% in FY22 due to declines in bond interest, interest on mobilization advances and interest on lease liabilities.

As on March 31, 2022, the company’s order book stands at Rs 13,104 crore. During the year under review, due to high competition in the road sector, the company was awarded 10 projects with a combined contract value of 9,350 crore against the target value of 12,000-15,000 crore.

In view of the company’s future development plans coupled with the fund’s requirement to implement the plans, the company’s directors have not recommended any dividends to shareholders in FY22.

During the year, the company diversified into the Power Transmission segment to expand its revenue stream beyond road projects and expects to achieve encouraging revenue levels in the coming fiscal years.

The company has formed Bharat Highways invIT as an Infrastructure Investment Trust and proposes to transfer its equity stake in certain HAM projects for monetization. In return for this, the company will receive InvIT or Cash consideration units.

The company is also looking to diversify its HAM operating assets through InVIT, which will free up capital for further growth.

Besides, the government’s efforts in building infrastructure and unveiling the Gati Shakti Master Plan are expected to give further impetus to the implementation of the project and avoid unnecessary delays.

The company has lower operating costs, which can be attributed in part to its integrated operations and proactive technology investments.

The company continuously focuses on building competitive advantage in its core business areas to ensure that it is in a good competitive position.

Its rich experience in the infrastructure sector, continuous operational improvement, process excellence, financial discipline and timely completion of projects have strengthened the company’s overall competitive position in the sector.