Buy PSP Projects; target of Rs 511: Dolat Capital

Dolat Capital's research report on PSP Projects

We downgrade our revenue and PAT estimates for FY19E/ FY20E to factor in 9MFY19 and lower order inflow for FY19E. However, we upgrade our EBITDA margin by 39bps for FY19E considering 9MFY19 and maintain for FY20E. We expect 30.2%/ 26.9% revenue/ PAT CAGR over FY19E-21E with EBITDA margins of 13.9%/ 13.3% for FY19E/ FY20E. With its conservative strategy towards leverage and efficient capital allocation, PSP will continue to remain net cash company with negative Net D:E of 0.6x over FY19E-21E. PSP will continue to witness superior return rations (average RoE/ RoCE of 27.2%/ 28.0% over FY19E-21E) led by strong PAT growth, well managed lean balance sheet and efficient working capital management.

Outlook

We rollover to FY21E, accordingly we maintain ‘BUY’ with a TP of `511 (13x FY21E EPS).