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Building brick by brick

Incorporated in 1999, the Hyderabad-based integrated infrastructureservice Power Mech Projects, started with ETC in the power sector. Its diversification into non-power, to mitigate the anticipated slowdown in thermal capacity addition, was a step in the right direction. Its overseas operations added to its diversity. For stability and predictability, it bolstered its position in O&M; its recent foray into MDO too appears aimed at this. All this combined hold the key to its sturdy assurance, and its diversified services mean its opportunity landscape is broad-based and prospect-rich. Key outputs from our recent management interaction:

Well-diversified play. Over the years, it has diversified well across segments making it a pure infrastructure player. Being a leader in power ETC, it is wellset to capture the 43GW thermal capacity addition planned over FY23-32. This also offers O&M prospects, post-execution (managing 44 AMCs in India, 11 overseas). Moreover, it has strengthened its position in FGD, water, railways, T&D, MDO, industries and other civil areas. This broad-bases the opportunity landscape and reduces dependence on any single segment to keep growing

Better placed than competition. The company operates in sectors where keen competition reigns. It is, however, better placed with in-house resources, manpower strength and equipment (~300 cranes). This has strengthened its position, thereby leading to a sturdier, ~Rs241bn (at end-Oct’22), order backlog and a robust order pipeline across segments.

Guides to inspiring growth. The diversification to non-power holds the key to its 47% FY17-22 revenue CAGR. A sturdy OB and proven execution ability set the stage for an equally inspiring >35% revenue CAGR over FY22-24. The envisaged shorter WC cycle, it believes, would help push much growth.

Valuation, outlook. A well-diversified play, in-house strength (people, equipment), a sturdier OB and pipeline, rising margins, healthy balance sheet with better NWC and a healthy outlook augurs well for its future. The stock trades at ~20x TTM P/E. We do not have a rating on it. Risk: Slow ordering.

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