Target: ₹715
CMP:: ₹598.30
We met the management of PSP Projects Ltd (PSP) Company has maintained its FY23 guidance on revenue (at ₹ 2,200 crore), EBITDA margin (11-13 per cent) and order inflow (at ₹2,200 crore). After achieving 60 per cent of order inflow target (incl ₹750 crore received post June-22), PSP Projects is eying incremental inflow from Nestle, Maruti, central vista & DLF.
PSP Projects is expecting good opportunity from precast segment in commercial and building space
On slow moving order book, Bhiwandi project matter is in court and resolution deadline is extended to September (previously August). Precast is another growth area and on low base, revenue contribution is expected to increase to 20 per cent of revenue in FY24 from 11 per cent in FY23.
Total fund and non-fund based limit stood at ₹1,050 crore and 50 per cent is utilised. The company is currently not looking at equity fund raising for next 4-6 month, but will consider the same if they receive large size projects. Balance sheet remain lean with net cash of ₹80 crore as Q1-FY23.
We reiterate Buy rating on PSP Projects with target price of ₹715 at 12x FY24 EPS.
Key positives in PSP Projects are its execution ability with stable cash flow, consistent order win in the building construction segment and lean balance sheet for growth.