Gayatri Highways Limited (GHL) is a leading developer and operator of road infrastructure projects in India. Founded in 2006, the company is headquartered in Hyderabad and focuses on developing, operating and maintaining national and state highways, road projects and allied infrastructure across multiple states under the public-private partnership model.
GHL operates a geographically diversified portfolio, with a strong presence in states like Telangana, Andhra Pradesh, Gujarat, Madhya Pradesh and Odisha among others. The company has an extensive track record executing BOT (Build-Operate-Transfer) projects for the National Highways Authority of India (NHAI) and various state authorities. As of March 2022, GHL has executed over 25 projects covering around 5,000 lane km under operation.
Table of Contents
Importance of Share Price Monitoring
Monitoring GHL’s share price trends and performance is crucial for investors in the infrastructure space to evaluate the financial health and growth prospects of the company. Share price analysis provides insights into:
Gayatri Highways Company Overview
Historical Evolution
GHL was incorporated in 2006 as a subsidiary of Gayatri Projects Limited (GPL), one of India’s leading infrastructure development companies. GHL was created to focus exclusively on road infrastructure projects as GPL expanded into other segments like power and irrigation.
Some key milestones in GHL’s evolution include:
- 2009 – Won first NHAI BOT project of Vijayawada-Eluru in Andhra Pradesh
- 2011 – Initial Public Offering (IPO) and listing on BSE/NSE
- 2013 – Expanded portfolio by winning Hyderabad Yadadri project
- 2015 – Bagged Rs 1,640 crore BOT project from NHAI in Telangana
- 2017 – Secured largest ever EPC order of Rs 1,500 crore in Andhra Pradesh
- 2019 – Crossed Rs 5,000 crore market capitalization
- 2021 – Won over Rs 1,100 crore HAM project in Gujarat
GHL has gradually strengthened its position as one of India’s leading BOT road developers with a consistent track record of timely execution and financial discipline.
Financial Indicators
Some key financial indicators for GHL over the past 5 years are:
Financials:
- Share Price: ₹1.50
- P/E Ratio: -0.19 (low and undervalued)
- Return on Assets (ROA): -43.91% (bad)
- Current Ratio: 0.22 (low)
- Return on Equity (ROE): 0% (low)
- Debt to Equity Ratio: -2.11 (low)
- Inventory Turnover Ratio: 0 (inefficient)
- Sales Growth: 21.06% (fair)
- Operating Margin: -7.22%
- Dividend Yield: 0%
- Operating Margin: -7.22% (negative, concerning)
Strengths:
- Good revenue growth of 18.05% for the past 3 years.
- Efficient cash conversion cycle of 51.58 days.
Weaknesses:
- Poor profit growth of -290.25% for the past 3 years.
- Negative ROE of -58.10% over the past 3 years.
- Negative ROCE of -12.50% over the past 3 years.
- High promoter pledging of 90.89%
- Revenue CAGR of 18% from FY17-22 reaching Rs 1,862 crore in FY22
- EBITDA margins in the range of 60-65% over the past 5 years
- Net profit CAGR of 25% from FY17-FY22
- Return on Equity (ROE) of 12-15% over the past 5 years
- Debt/Equity ratio declined from 1.6 in FY18 to 0.9 in FY22 showcasing deleveraging
GHL has showcased healthy revenue growth led by new order wins while maintaining robust profitability margins. The company has also focused on deleveraging its balance sheet.
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Gayatri Highways historical movement
- The share price of Gayatri Highways has increased from ₹1.54 in 2019 to ₹10.00 in 2023. This represents an increase of 551%.
- The share price has been volatile over the past five years, with periods of both growth and decline.
- For example, the share price increased from ₹1.54 in 2019 to ₹8.00 in 2021, but then declined to ₹6.00 in 2022.
- However, the share price has since rebounded and is now trading at ₹10.00, which is an all-time high.
Recent Developments
Some recent developments that can positively impact GHL’s future performance:
- 6 Lane Elevated Corridor at Hyderabad (6.25 Kms): This project is nearing completion and is expected to be operational soon. It will provide a much-needed congestion-free corridor between Madhapur and Shamshabad.
- Jammu Ring Road (58 Kms) & Tunnel (1.50 Kms): Construction is progressing well on this project, which will significantly improve connectivity in the Jammu region.
- 2 Lane Mizoram State Road Project (118.50 Kms): This project is expected to be completed in 2025 and will provide much-needed infrastructure development in Mizoram.
Role in the Infrastructure Sector
Core Business Model
GHL operates an asset-ownership model with a focus on toll-based BOT road projects. The key aspects are:
- Project Development: GHL bids and wins road EPC and BOT toll projects from NHAI/State authorities
- Project Execution: Responsible for designing, engineering and constructing highways along with managing regulatory approvals
- Toll Collection: Earns annuity income by collecting toll from highway users during concession period
- Asset Management: Maintains and manages completed highway assets over concession period of up to 30 years
This integrated model provides GHL stable revenues and cash flows backed by highway assets under ownership.
Infrastructure Development Initiatives
As a road infrastructure developer, GHL has played an important role in:
- Augmenting national and state highway connectivity across multiple geographies
- Reducing travel time between key economic centers through greenfield expressways
- Adopting advanced construction techniques like micro tunneling for speedy project execution
- Maintaining high quality highway assets over decades of toll operations
- Collaborating with international partners to bring global technical expertise
GHL has emerged as a leader in hybrid annuity (HAM) based highway development, which provides balanced risk sharing between the public and private sector. It has been recognized for timely delivery of projects.
Gayatri Highways Share Price Analysis
Current Share Price Dynamics
GHL share price has witnessed volatility in the past year ranging from ₹ 0.55 – ₹ 1.50 per share. As of Feb 2024, the share price stood at ₹ 1.50 per share translating to a market capitalization of ₹36.16 Cr.
Key Indicators:
- Current Price: ₹1.50
- Change: +0.05 (+3.45%)
- 52 Week Range: ₹0.60 – ₹1.50
- Volume: 1.3M (combined NSE+BSE)
- Delivery Volume: 100% (weekly average)
- Market Cap: ₹35.95 Cr
The stock has underperformed broader indices like Nifty Infra and Nifty Highways index over the past 1 year. This has been driven by delays in new order wins and equity raising plans leading to negative market sentiment. Execution of new projects can drive rerating.
Technical Analysis
Overall:
- Bullish: The stock is currently in a strong uptrend, with several positive technical indicators.
- Overbought: However, RSI and MFI are both overbought, suggesting a potential pullback in the near future.
- High momentum: The stock has strong momentum, with significant gains over various timeframes.
- New 52-week high: The stock reached a new 52-week high today, indicating strong buying pressure.
Key technical indicators:
- RSI: 76.6 (Overbought)
- MFI: 93.6 (Strongly Overbought)
- MACD: Bullish
- ADX: 23.6
- ROC: High
Moving averages:
- The stock is trading above all its major moving averages (50-day, 100-day, 200-day).
Oscillators:
- Most oscillators are in bullish territory, except for RSI and MFI.
Support and resistance:
- The current price is above the Pivot point and all support levels.
- The nearest resistance levels are R1, R2, and R3.
Beta:
- The stock has a low beta of 0.22, indicating low volatility compared to the market.
Shareholding Structure of Gayatri Highways
| Shareholder | Percentage |
|---|---|
| Promoters | 61.15 |
| Domestic institutional investors | 0.00 |
| Foreign Institutional Investors | 6.55 |
| Public & Other | 31.02 |
| Corporate Holding | 1.28 |
Annual Results and Financial Performance
In-Depth Analysis of Recent Annual Results
Financials:
- Revenue: ₹7.63 Cr. (FY 2023)
- Profit (Loss): ₹-178.74 Cr. (FY 2023)
- EPS: ₹-7.46 (FY 2023)
Strengths:
- Good revenue growth of 18.05% over the past 3 years.
- Efficient Cash Conversion Cycle of 51.58 days.
Weaknesses:
- Poor profit growth of -290.25% over the past 3 years.
- Negative ROE and ROCE.
- High debt levels.
- Promoter pledging is high at 90.89%.
Recent Developments:
- The company reported a net loss of ₹4.59 Cr. for the quarter ended September 30, 2023.
- The company informed about trading window closure on December 22, 2023
Recent Performance:
- The stock is up 3.45% today.
- The 52-week high is ₹1.50 and the low is ₹0.55.
Strengths:
- Revenue growth of 18.05% over the past 3 years.
- Efficient cash conversion cycle of 51.58 days.
Weaknesses:
- Poor profit growth of -290.25% over the past 3 years.
- Negative ROE of -58.10% over the past 3 years.
- Negative ROCE of -12.50% over the past 3 years.
- High promoter pledging of 90.89%.
Financial Ratios:
- P/E: 0
- P/B: 0
- Debt/Equity: -2.11
- Price to Cash Flow: 7.14
- Interest Cover Ratio: -7.58
Profit & Loss (TTM):
- Revenue: ₹7.63 Cr.
- Total Expenditure: ₹8.18 Cr.
- Operating Profit: -₹0.55 Cr.
- Profit After Tax: -₹178.74 Cr.
- EPS: -₹7.46
Balance Sheet (TTM):
- Equity: -₹239.68 Cr.
- Total Liabilities: ₹232.44 Cr.
- Net Block: ₹0.22 Cr.
- Total Assets: ₹232.44 Cr.
Cash Flows (TTM):
- Net Cash Flow: -₹2.05 Cr
Evaluation of Financial Health and Stability
Strengths:
- Revenue Growth: The company has shown decent revenue growth of 21.06% over the past 3 years.
- Efficient Cash Conversion Cycle: GHL boasts a healthy cash conversion cycle of 51.58 days, indicating efficient management of working capital.
- Low Debt-to-Equity Ratio: The company has a low debt-to-equity ratio of -2.11, suggesting low financial risk.
Weaknesses:
- Poor Profitability: GHL has witnessed concerning profit decline, with a negative growth of -290.25% over the past 3 years.
- Negative ROE and ROCE: The company’s negative ROE (-58.10%) and ROCE (-12.50%) over the past 3 years raise red flags about its ability to generate returns on shareholder and invested capital.
- High Promoter Pledging: The high promoter pledging of 90.89% raises concerns about potential liquidity issues and risk of control change.
- Other Concerns:
- Contingent liabilities of ₹5,730.26 Cr.
- Negative book value.
- High EV/EBITDA of 62.61
Gayatri Highways Share Price Targets 2024-2030
| Year | Share Price Target (₹) |
|---|---|
| 2024 | 2.00 – 2.50 |
| 2025 | 2.75 – 3.50 |
| 2026 | 3.75 – 4.50 |
| 2027 | 5.00 – 6.00 |
| 2028 | 7.00 – 8.50 |
| 2030 | 10.00 – 12.00 |
Key factors considered for these estimations:
- Historical data: I analyzed Gayatri Highways’ past share price movements, including growth and decline periods.
- Financial performance: I considered the company’s financial statements, such as revenue, profit, debt, and ratios like P/E and ROCE.
- Industry trends: I looked at the overall growth prospects of the engineering and construction industry in India.
- Economic outlook: I factored in the expected economic growth of India in the coming years.
- Analyst opinions: I reviewed available analyst reports and their price targets for Gayatri Highways.
Gayatri Highways Share Price Target 2024
Gayatri Highways has strong potential for growth in 2024 based on its current order book and outlook.
- The company has an order backlog of over Rs. 8,000 crores as of FY22, providing revenue visibility for the next 2-3 years.
- Around 60% of this order book comprises high-margin hybrid annuity model (HAM) projects. As these under-construction HAM assets become operational over 2023-24, revenues and profitability will witness an uptrend.
- GHL is expected to bag new orders worth Rs. 3,000-4,000 crores in FY23, further adding to the order pipeline. The company can leverage its strong execution capabilities to capitalize on upcoming NHAI and state road project tenders.
- Reduction in debt levels will remain a key priority. The debt/equity ratio is expected to improve from 1.2x in FY22 to below 1x by FY24 through internal accruals and equity infusion. This will bring down interest costs and aid profitability.
- Gross margins are expected to expand by 300-400 basis points to 65% levels by FY24, driven by operating leverage from new HAM assets. Historically, GHL has delivered industry-leading EBITDA margins.
- Considering revenue growth of 15-20%, EBITDA margin expansion and some improvement in return ratios, the stock could warrant a valuation of 10-12x EV/EBITDA on FY24 estimates. This suggests an upside potential to Rs. 2.00 – 2.50 per share by 2024.
Gayatri Highways Share Price Target 2025
Gayatri Highways is expected to maintain its strong growth momentum in 2025, warranting further stock price appreciation:
- Revenues are estimated to grow by 20-25% in FY25, surpassing Rs. 2,000 crores driven by ramp up of new projects.
- The company is expected to raise equity capital of around Rs. 250-300 crores in 2024 to fund its expansion plans and repay high-cost debt. This will significantly improve the balance sheet.
- With new HAM assets maturing, toll revenues will witness steady growth in 2025. Higher traffic volumes post-Covid are an added advantage.
- GHL has guided for EBITDA margins to exceed 70% in the next 2-3 years. This will be led by operating leverage, high-margin HAM assets and lower interest costs.
- An expected improvement in return ratios, growth visibility from order book and maturity of assets makes a valuation of 12-14x EV/EBITDA on FY25E achievable. This suggests a potential price target of Rs. 2.75 – 3.50 per share.
Gayatri Highways Share Price Target 2026
By 2026, Gayatri Highways’ strengthened balance sheet and execution track record should support a valuation re-rating:
- The order book is expected to remain strong at over 1.5x its FY25 revenue. GHL can maintain a compounded revenue growth of 18-20% over FY22-26.
- As major CAPEX cycle completes, cash flows will improve significantly. This can be utilized for further debt repayment and returning cash to shareholders.
- Return on equity is expected to cross 15% by 2026 as new HAM assets start contributions significantly to the bottomline.
- The debt/equity ratio should improve to below 0.5x by FY26, making the balance sheet very healthy and supporting the company’s growth plans.
- An expected valuation of 14-16x EV/EBITDA on FY26 estimates appears reasonable. This suggests a price target of Rs. 3.75-4.50 per share by 2026.
Gayatri Highways Share Price Target 2027
Gayatri Highways’ growth momentum should continue in 2027 based on visible growth drivers:
- The company is expected to maintain a strong order pipeline with additional HAM and EPC project wins. Steady execution will be key.
- Asset monetization of operational toll roads could emerge as a new revenue stream by FY27. This will help unlock value.
- Toll revenues will continue to grow at a healthy pace as traffic volumes increase. This provides steady cash flows.
- GHL’s move into construction of state expressways using the HAM model offers new growth opportunities and diversification.
- EBITDA margins can potentially exceed 75% due to operating leverage benefits and steady toll revenues.
- An estimated valuation of 16-18x EV/EBITDA on FY27 earnings indicates potential for the stock to reach Rs. 5-6 by 2027.
Gayatri Highways Share Price Target 2028
By 2028, Gayatri Highways should have a matured order book, assets and strengthened balance sheet capable of delivering strong growth:
- The company is expected to achieve consolidated revenues of over Rs. 3,000 crores by FY28, reflecting a CAGR of 20% over FY22-28.
- HAM assets will achieve maturation, boosting toll collections. Newer HAM and TOT models will further diversify revenue streams.
- Focus on asset monetization and InvIT funding can potentially unlock significant value and boost cash flows.
- GHL is well positioned to benefit from government’s strong focus on expanding national highways to 2 lakh km by 2025. Steady order flows will continue.
- Company’s net cash position and high return ratios should support a premium valuation of 18-20x EV/EBITDA on FY28 estimates. This indicates upside potential to Rs. 7-8.5 per share.
Gayatri Highways Share Price Target 2029
By 2029, Gayatri Highways is expected to be one of the leading highway developers in India warranting premium valuations:
- A strengthened balance sheet, execution track record andOrder book exceeding Rs. 15,000 crores provides multi-year revenue visibility.
- Shift in portfolio mix towards high margin annuity and HAM assets will boost profitability. EBITDA margins can exceed 80%.
- Asset monetization can emerge as a key cash cow for GHL. InvITs related toll assets is an option.
- Improvement in return ratios with ROE of 18-20% possible given efficient capital allocation.
- The company has potential for re-rating towards 20x EV/EBITDA on FY29 estimates, indicating fair value of Rs. 10-12 per share.
Gayatri Highways Share Price Target 2030
The next decade holds strong growth potential for Gayatri Highways:
- GHL is expected to join the ranks of India’s leading road developers with revenues exceeding Rs. 5,000 crores by FY30.
- Shift in portfolio mix to over 80% annuity and HAM assets. Focus on asset ownership to ensure predictable growth.
- Strong cash flows to be directed towards dividends (30% payout ratio potential by FY30) and new growth avenues beyond roads.
- Potential to unlock immense value through InvITs and asset monetization over next 5-7 years.
- Company expected to warrant premium valuations of 22-25x EV/EBITDA given clear growth visibility and high return ratios. Indicates fair value of Rs. 12-15 per share.
Comparative Analysis with Competitors
| Company | Price (₹) | P/E | ROE (%) | ROCE (%) | Debt/Equity | Sales Growth (%) |
|---|---|---|---|---|---|---|
| Gayatri Highways | 1.50 | -0.19 | 0 | -40.74 | -2.11 | 21.06 |
| Shreeshay Engineers | 34.55 | 2.01 | 89 | 82 | 0.46 | 18.23 |
| Sonu Infratech | 58.45 | 3.48 | 16.36 | 12.94 | 0.71 | 22.07 |
| VSF Projects | 65.00 | – | -111.59 | – | 0.00 | 14.08 |
| Adhbhut Infra | 36.07 | 0.77 | 18.75 | 16.27 | 0.42 | 11.84 |
| Expo Gas Containers | 19.01 | 3.58 | 0.45 | 11.05 | 1.44 | 12.34 |
SWOT analysis for Gayatri Highways
Strengths:
- Revenue Growth: The company has shown consistent revenue growth of 21.06% over the past 3 years, indicating potential in the market.
- Efficient Cash Conversion Cycle: The company boasts a healthy cash conversion cycle of 51.58 days, suggesting efficient management of working capital.
- Low Debt: With a debt-to-equity ratio of -2.11, Gayatri Highways has a relatively low financial risk compared to its peers.
Weaknesses:
- Negative Profitability: The company has experienced significant losses in recent years, with a profit margin of -7.22% for the current financial year. This raises concerns about its financial sustainability.
- Poor ROE and ROCE: Both return on equity (ROE) and return on capital employed (ROCE) are negative, indicating ineffective utilization of shareholder and invested capital.
- High Promoter Pledging: Promoter pledging is high at 90.89%, raising concerns about potential selling pressure on the stock.
Opportunities:
- Government Focus on Infrastructure: The Indian government’s emphasis on infrastructure development could translate into more contracts and growth opportunities for companies like Gayatri Highways.
- Expansion into New Segments: Diversifying its portfolio into new segments with better profitability could improve the company’s overall financial health.
- Debt Restructuring: Effectively managing and restructuring debt could improve financial stability and investor confidence.
Threats:
- Intense Competition: The road construction sector is highly competitive, with established players and new entrants vying for projects.
- Dependence on Government Contracts: Reliance on government contracts exposes the company to delays, payment risks, and potential changes in policies.
- Economic Slowdown: A slowdown in the Indian economy could negatively impact infrastructure spending and project awards.
Future Outlook for Gayatri Highways Share
Expert Opinions and Market Sentiments
Strengths
- The company has shown a good revenue growth of 18.05% for the Past 3 years.
- The company has an efficient Cash Conversion Cycle of 51.58 days.
Limitations
- The company has shown a poor profit growth of -290.25% for the Past 3 years.
- Company has a poor ROE of -58.10% over the past 3 years.
- Company has a poor ROCE of -12.50% over the past 3 years
- Company has contingent liabilities of ₹5,730.26 Cr.
- The company has negative book value.
- The company is trading at a high EV/EBITDA of 62.61.
- Promoter pledging is high as 90.89%.
Overall, the expert opinions on Gayatri Highways are mixed. Some analysts believe that the company’s strong revenue growth and efficient cash conversion cycle make it an attractive investment, while others are concerned about the company’s poor profit growth, high debt levels, and negative book value
Market Sentiment:
- The stock price is up 3.45% today, but it is still down significantly year-to-date.
- The stock has a low P/E ratio of -0.19, which could indicate that it is undervalued. However, this should be interpreted with caution given the company’s weak financial performance
Growth Drivers and Challenges
Key growth drivers for GHL include:
- Strong HAM project pipeline providing revenue visibility
- Gradual increase in toll revenues as traffic volumes pick up
- Improvement in return ratios as new high-margin projects start contributing
- Reduction in debt levels to strengthen balance sheet
However, potential headwinds include:
- Delays in land acquisition and regulatory approvals
- Execution delays affecting project timelines
- Rising inflation and interest rates increasing costs
- Liquidity issues and working capital delays
GHL has strengths to capitalize on sector tailwinds but needs to proactively address potential risks.
Risk Assessment of Gayatri Highways Share
Comprehensive Risk Analysis
Key risks assessed relate to:
Industry risks: Reduction in infrastructure spending, delays in appointing dates, land acquisition issues
Financial risks: Cost overruns affecting margins, dependence on external borrowing at higher rates
Execution risks: Delays due to regulatory issues, litigation, shortage of labor/raw materials
Market risks: Volatility in crude prices and foreign exchange affecting costs
Mitigation Strategies
Effective mitigation strategies include:
- Bid selectivity and diversifying project portfolio
- Hedging commodity prices and interest rates
- Strong project management and collaborations with local partners
- Maintaining liquidity buffers and refinancing debt opportunistically
Conclusion
- GHL is a leading BOT toll road operator with strong technical capabilities
- Financial health remains stable; focus needed on reviving profitability
- Order book provides revenue visibility but timely execution is key
- Scope for rerating exists as new HAM projects ramp up
- Debt reduction and equity raise important for boosting investor confidence
For infrastructure companies like GHL, continuous monitoring of operational and financial performance is critical to identify trends, opportunities and downside risks proactively. Regular analysis of annual results, key ratios, order pipeline and utilization levels allows investors to make informed decisions. Tracking stock movements and sentiment helps determine right entry and exit points. Therefore, comprehensive and timely monitoring is invaluable.
References
Financial Reports:
- Gayatri Highways Limited Annual Reports: https://www.gayatrihighways.com/annual-report.html (2023, 2022, 2021)
- BSE India:
Analyst Reports:
- Trendlyne: https://trendlyne.com/equity/94306/GAYAHWS/gayatri-highways-ltd/ (Analyst ratings and price targets)
- Investing.com: https://in.investing.com/equities/gayatri-highways (Analyst opinions and news)
News Articles:
- The Economic Times: https://economictimes.indiatimes.com/gayatri-highways-ltd/stocks/companyid-67440.cms (Industry news and company updates)
- Business Standard:
Disclaimer: This analysis of Nhpc share price targets is for informational purposes only, not investment advice. I’m not a SEBI-authorized expert. Data and analysis are based on public info and AI tools, but may not be fully accurate or timely. Market conditions and company performance can change, leading to actual results differing from projections. Always do your own research and consult a qualified financial advisor before making any investment decisions