Recent Price Movement and Market Context
H.G. Infra Engineering’s shares have been under pressure, falling by 2.19% over the past week and 5.08% in the last month, while the broader Sensex index has gained 1.37% and 1.50% respectively during these periods. Year-to-date, the stock has plummeted by 43.13%, starkly contrasting with the Sensex’s 9.59% rise. Over the last year, the stock has declined by 31.91%, whereas the Sensex has appreciated by 10.38%. This underperformance highlights the stock’s struggles relative to the broader market.
On 20-Nov, the stock traded close to its 52-week low, just 1.12% above the lowest price of ₹854.75. The stock has been falling for four consecutive days, losing 3.47% in that span. Notably, the weighted average price indicates that more volume has been traded near the lower price levels, suggesting selling pressure. Additionally, the stock is trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, signalling a bearish trend.
Investor participation has increased, with delivery volumes rising by 18.05% to 52,510 shares on 19 Nov compared to the five-day average, indicating heightened activity amid the decline. Despite this, liquidity remains adequate for moderate trade sizes, with a 2% threshold of the five-day average traded value equating to approximately ₹0.23 crore.
Perfect timing to enter! This Small Cap from IT - Software just turned profitable with growth momentum clearly building up. Get in before the broader market notices!
- - New profitability achieved
- - Growth momentum building
- - Under-the-radar entry
Financial Performance and Valuation Analysis
Despite the recent price weakness, H.G. Infra Engineering exhibits some positive financial attributes. The company maintains a high management efficiency with a return on capital employed (ROCE) of 21.17%, reflecting effective utilisation of capital. Furthermore, the firm has demonstrated healthy long-term growth, with net sales increasing at an annual rate of 20.16% and operating profit growing at 26.01% annually.
The stock’s valuation appears attractive, trading at a discount relative to its peers, with an enterprise value to capital employed ratio of 1.3 and a half-year ROCE of 9.9. However, this valuation advantage is tempered by the company’s deteriorating profitability, as profits have declined by 24.2% over the past year. The majority ownership remains with promoters, which can be a stabilising factor but does not offset the financial headwinds.
Persistent Weakness in Earnings and Cash Flows
The primary reason for the stock’s decline lies in the company’s sustained negative financial results. H.G. Infra Engineering has reported losses for five consecutive quarters, signalling ongoing operational challenges. Operating cash flow for the year is at a low ₹119.56 crore, while quarterly profit after tax (PAT) has fallen sharply by 35.4% to ₹52.18 crore. The half-year ROCE has also dropped to a low of 9.88%, indicating diminished capital efficiency.
These financial setbacks have translated into below-par stock performance not only in the short term but also over longer horizons. The stock has underperformed the BSE500 index over the last three years, one year, and three months, underscoring persistent investor concerns about the company’s growth prospects and profitability.
Holding H.G. Infra Engg. from Construction? See if there's a smarter choice! SwitchER compares it with peers and suggests superior options across market caps and sectors!
- - Peer comparison ready
- - Superior options identified
- - Cross market-cap analysis
Conclusion: Why the Stock is Falling
In summary, H.G. Infra Engineering’s share price decline as of 20-Nov is primarily driven by its ongoing weak financial results, including consecutive quarterly losses, declining profits, and reduced operating cash flows. Despite some positive long-term growth metrics and an attractive valuation relative to peers, the market remains cautious due to the company’s deteriorating earnings and underperformance against key benchmarks. The stock’s proximity to its 52-week low and trading below all major moving averages further reinforce the bearish sentiment among investors.
Until the company can demonstrate a sustained turnaround in profitability and cash flow generation, the downward pressure on its shares is likely to persist, reflecting the market’s assessment of near-term risks and challenges.
Get 2 full years of MojoOne Premium for only Rs. 12,999. Subscribe for 1 year and we'll add another year FREE. Offer valid for a limited time. Start Saving Now →
