YES Securities' research report on PSP Projects
PSP Projects Ltd (PSPPL) 4QFY23 results were better with revenue/EBITDA/adj. PAT beat of 17%/7%/7% to our estimate. Revenue grew on account of lower base however, EBITDA margins remained under pressure owing to elevated commodity prices. Order inflow reached all time high of Rs32bn while the order book as on 4QFY23 stands at 51bn providing revenue visibility for next 2‐3 years. Further with strong tender pipeline of Rs60bn already bided / planning to bid, management expects healthy order inflow of Rs30bn in FY24E. With big chunk of projects being in the initial stage of execution, management missed FY23 revenue guidance. However, with majority of the projects scheduled to be executed in FY24E management guided for 20‐25% revenue growth with EBITDAM in the range of 11‐13%.
Outlook
We believe PSPPL is well‐placed to capture growth opportunities in the sector. With a robust order book and proven execution prowess, we expect the company to post Revenues/EBITDA growth of 20%/23% CAGR respectively over FY23‐25E. Though we remain confident on company’s growth prospects, at CMP the stock trades at P/E of 13.4x/11.7x on FY24E/FY25E EPS respectively. Hence given the limited upside, we downgrade the stock to NEUTRAL rating with a revised TP of Rs723 valuing at 12x FY25 EPS.
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