Geojit's research report on Power Mech Projects
Power Mech Projects Ltd is a leading infrastructure construction company based in Hyderabad with global presence. Q1FY22 revenue grew by 56% YoY, however, it was below our estimate as the execution was impacted due to the rainy season. While the Civil & Erection segments sales grew by 121% YoY/ 117% YoY. Though the company didn’t bag any orders in Q2FY22, the order book remains robust at Rs15,809cr, which is 6.5x TTM revenue (incl. 9,294cr of mining order). EBITDA margin stood at 10.7% (vs –12.3% in the previous quarter last year) due to 1742bps improvement in gross margin. Higher other income (130% YoY) and the lower tax rate of 20.8% supported PAT to rise to Rs27cr YoY (vs. Rs55cr loss in Q2FY21). Management expects execution to pick-up in H2FY22 and has targeted to achieve Rs2,600cr of revenue in FY22 with 12.5 to 13% margins.
With the robust order book and an expectation of strong execution in the coming quarters, we revise our rating to Buy and value the stock at a P/E of 7.5x FY23E earnings with a target price of Rs.1,163.
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