Hold Power Mech Projects: target of Rs 2986: ICICI Securities

ICICI Securities's research report on Power Mech Projects

Power Mech reported a muted Q1FY26. Post-adjustment of the exceptional item (INR 2.9bn in revenue), revenue stood at INR 10bn (flat YoY), EBITDA was at INR 1.2bn (+6% YoY) and adjusted profit of INR 0.5bn (-18% YoY). Reported profit grew 31% YoY to INR 0.8bn. It also witnessed softness in order inflow (OI) due to delays in awarding of some pipeline projects; Q1 OI stood at INR 12.7bn (-27% YoY). Nonetheless, its order book (OB) remains healthy at INR 144bn (excluding MDO orders of INR 396bn) with a book-to-bill ratio of 2.8. The order outlook remains strong in the near-medium term given India’s revived interest in thermal power. With awards for greenfield thermal capacity going up in last few quarters and fresh opportunities likely in the nuclear power space, we expect a healthy pipeline over the next 2–3 years. We also expect the MDO business to aid in revenue accretion Q3FY26 onwards with contribution from the recently commenced KBP mine. We maintain HOLD.

Outlook

The company has been expanding its footprint beyond power services into segments like railways, water, and O&M, ensuring diversification and long-term growth visibility. It had an orderbook of INR 144bn (ex-MDO OB of INR 396bn), as of Q1FY26, translating to a book-to-bill ratio of 2.8x, providing strong revenue visibility. We maintain our HOLD rating on the stock with a TP of INR 2,986(unchanged).