Buy Power Mech Projects; target of Rs 3330: Geojit Financial Services

Geojit Financial Services is bullish on Power Mech Projects has recommended buy rating on the stock with a target price of Rs 3330 in its research report dated December 12, 2024.

Broker Research

December 12, 2024 / 14:10 IST

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Geojit Financial Services research report on Power Mech Projects

Power Mech Projects Ltd. (POWM) is a leading infrastructure construction company based in Hyderabad with a global presence. The company’s orderbook is largely backed by orders from Power segment which accounts for 76.8% of total mix. Q2FY25 consolidated revenues grew at 11% YoY to stand at Rs. 1,035cr., aided by strong execution in the erection segment. EBITDA grew at 9% YoY to stand at Rs. 124 cr.; however, margins saw a 21bps decline to stand at 11.9%. PAT stood at Rs.70cr. in Q2FY25 and Rs.131cr. in H1FY25, registering 36%/28% YoY growth, respectively. The current order book stands at Rs.58,067cr. POWM’s mining business made considerable progress in this quarter, with the H1FY25 revenues from the segment at Rs.26cr. With contributions from the KotreBasantpur mine expected to accrue in Q4FY25, the management expects MDO business to drive revenues. The peak revenues at peak rated capacity from both the mines are expected to be at Rs.2,100cr. Kotre Basantpur mine is expected to reach peak revenues in 2028, while Kalyaneswari Tasra mine is expected to achieve peak rated capacity in mid FY2027-28.

Outlook

The earnings are expected to grow at 41.3% and for ROE to improve significantly to 20.3% in FY27E. We value the stock at 15X PE on FY27E EPS, to arrive at a target of Rs.3,330, thereby upgrading our recommendation to BUY.

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