YES Securities' research report on PSP Projects
PSP Projects Ltd (PSPPL) Q3 performance was subdued with marginalrevenue growth of 2.4% YoY (on account of higher base) to Rs5bn however margins were in line with the consensus. Company has bagged highest ever order inflow of Rs32.9bn till date surpassing FY23E guidance. The entire orderbook of Rs50.8bn as on 3Q (excl. Bhiwandi and Pandharpurforming 16% of OB) is under execution. Current bid pipeline stands at Rs45bn, of which 70% orders are from Gujarat and 60% are private. FY24E revenue guidance stands at Rs26‐27bn, with margin of 12‐12.5% and an order inflow of Rs30bn. Key positives in PSP are its execution ability with stable cash flow, consistent order win in the building construction segment and lean balance sheet for growth. We had put the stock under review post recent run up in the stock and disappointing execution in 1H. However, with the recent interaction it has been coming across that the execution is now streamlined thereby providing revenue visibility and hence we have revised our revenue and EBITDA estimates by 4% each and PAT by 6% for FY25E With strong order book, timely project execution and prudent management pedigree, we expect PSPPL to post a revenue / EBITDA CAGR of 12%/15% over FY22/FY25E.
We have revised our rating to “NEUTRAL” with a revised TP of Rs764 valuing the EPC business at 12x FY25E EPS, implying an upside potential of 9% from the current levels.
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