Buy Power Mech Projects; target of Rs 727: Geojit

Geojit's research report on Power Mech Projects

Company has an order backlog of Rs.7,353Cr (as on 16th Feb 2021), which shows revenue visibility for next 3 years. Company enjoys market leadership position in power O&M (Operations and Maintenance) and erection business with a market share of 55%-60%. Diversification of business to non power segment, especially civil (including railway, petro chemical, water etc) has helped the company to be in the growth track . We expect order backlog to grow at 14% with an average order intake of Rs.3,500Cr-4,000Cr per year. Revenue is expected to grow at a CAGR of 30% during FY21-23 and ROE to be at 16.3% by FY23E.

Outlook

We initiate coverage on POWERMECH with a BUY rating based on 6x FY23E earnings with a target price of Rs.727.

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