HG Infra Engineering Limited has announced a significant addition to its project portfolio, securing a ₹274.11 crore contract from DLF Cyber City Developers Limited. This development marks a notable expansion in the company's order book and underscores its growing presence in the infrastructure sector.

Contract Details

The newly awarded contract involves executing 'Infrastructure (Access Road Network) works' at the DLF Downtown, Phase-2 project located in Sector-25A, Gurugram, Haryana. Here are the key details of the project:

It's worth noting that the contract value excludes taxes, with GST and Labour Cess to be applied as applicable.

Project Significance

This contract win is significant for HG Infra Engineering for several reasons:

1. Revenue Growth: The ₹274.11 crore project will contribute to the company's revenue pipeline.
2. Portfolio Diversification: By working with DLF Cyber City Developers, HG Infra Engineering expands its client base in the private sector.
3. Strategic Location: The project's location in Gurugram, a key business hub, may open doors for future opportunities in the region.

Company Disclosure

In compliance with SEBI regulations, HG Infra Engineering has promptly disclosed the contract details to the stock exchanges. The company confirmed that the contract is domestic in nature and does not involve any related party transactions.

Market Implications

For investors and market watchers, this contract win signals HG Infra Engineering's continued growth trajectory and its ability to secure high-value projects. The infrastructure sector remains a critical focus area for both public and private investments in India, and companies like HG Infra Engineering are well-positioned to benefit from this trend.

As the company embarks on this new project, stakeholders will likely keep a close eye on its execution capabilities and the potential impact on its financial performance in the coming quarters.

HG Infra Engineering Limited (HGIEL) has announced its financial results for the second quarter, revealing a significant decline in profitability despite maintaining stable revenue.

Financial Performance

For Q2, HGIEL reported:

The company's consolidated revenue from operations remained relatively flat at ₹9,045.03 crore, compared to ₹9,024.08 crore in the same quarter last year, representing a marginal increase of 0.2%.

Profitability Metrics

HGIEL experienced a notable decline in profitability:

• EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) decreased by 6.1% year-over-year to ₹2,062.33 crore.
• EBITDA margin contracted to 22.8% from 24.3% in the corresponding quarter of the previous year.
• Net profit after tax fell sharply by 35.8% to ₹518.36 crore, compared to ₹807.12 crore in the previous year's quarter.
• Net profit margin declined to 5.7% from 8.9% year-over-year.

Key Factors Affecting Performance

The decline in profitability can be attributed to several factors:

1. Increased finance costs, which rose to ₹1,081.10 crore from ₹624.20 crore in the same quarter last year.
2. Higher depreciation and amortization expenses of ₹400.46 crore, up from ₹358.87 crore.
3. A significant increase in contract and site expenses to ₹2,725.82 crore, compared to ₹670.82 crore in the previous year's quarter.

Balance Sheet and Cash Flow

As of September 30:

• Total assets stood at ₹1,03,943.99 crore, up from ₹87,727.12 crore at the end of March.
• The company's borrowings increased, with non-current borrowings at ₹41,079.03 crore and current borrowings at ₹14,671.19 crore.
• Cash and cash equivalents were ₹620.58 crore, down from ₹870.89 crore at the end of the previous fiscal year.

Operational Highlights

During the quarter, HGIEL's Board of Directors approved a proposal to divest 100% investment in five of its wholly-owned subsidiaries, subject to various conditions including achievement of COD (Commercial Operation Date) in respective projects and approvals from lenders and regulatory authorities.

Outlook

The company's focus on divesting certain subsidiaries may indicate a strategic realignment to improve overall financial performance. However, the execution of these divestitures and their impact on future results remain to be seen.

Investors and analysts will likely be watching closely to see how HG Infra Engineering addresses the profitability challenges and manages its increased debt levels in the coming quarters.