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PSP Projects delivered a strong Q1FY27 operationally, with revenue growing 53% YoY, reflecting healthy execution momentum despite monsoon and labour-migration seasonality. Reported EBITDA margin stood at 6.4% (+166bps YoY) but came in below our 7.0% estimate and management's 7–8% guidance, as first-two-months revenue conversion lagged and employee cost ran elevated at 5.4% of sales; management expects margins to recover to 7%+ from H2FY27. Order inflow was muted at INR 6.3bn (~93% Adani); order book remained robust at INR 132.5bn (~4x TTM revenue, +103% YoY), with within-group projects at 70%. Management retained FY27 revenue guidance of INR 40–45bn (25%+ revenue growth post FY28E) and its net-debt-free target over the next 2–3 quarters, aided by interest-free mobilisation advances that continue to lower finance costs. The bid pipeline stands at INR 62bn (61% group), while the INR 70– 80bn Commonwealth Games opportunity remains a potential upside yet to convert and is excluded from inflow guidance. We keep our earnings estimates and FY28E EPS largely unchanged. Stock is up 65% in FY27E so far, we change our rating to Accumulate (from BUY) on an unchanged earnings estimate and target price of INR 1,062 (20x FY28E EPS).

Q1FY27 operating beat, PAT miss on higher tax: Revenue grew 53.2% YoY to INR 7,853Mn, ahead of our estimate of INR 6,666 Mn. EBITDA stood at INR 505Mn, up 106.5% YoY, with margin at 6.4% versus 4.8% YoY- below our estimate of 7%, as cost of sales ran ~19% ahead of our estimate. PBT at INR 240 Mn was 7% above our estimate, but PAT came in at INR 152 Mn, 11% below our estimate, impacted by a higher-than-expected effective tax rate of ~37% and elevated depreciation, partly offset by lower interest costs (-32.5% YoY).

Order book stable; inflows muted after a record FY26: Outstanding order book is at INR 132.5bn, +103% YoY (on a low Q1FY26 base) though marginally lower QoQ versus INR 134.5bn in March 2026, retaining strong multiyear visibility at ~4x TTM revenue. Adani projects form 70% of the order book (67% in FY26); 30% external - while government share eased to 23% (25% in FY26), extending the private-sector tilt; by segment, institutional (39%) and residential (37%) dominate. Order inflow was soft at INR 6.3bn during the quarter, a sharp step-down from the record FY26 run-rate (INR 109bn), reflecting monsoon-led seasonality and a high Q4 base. The bid book stands at INR 62bn (61% group / 39% external), with the INR 70-80bn Commonwealth Games opportunity flagged last quarter yet to convert into wins.

Balance sheet strengthens; net-debt-free target reiterated: Mobilisation advances stood at INR 8,360mn and are entirely interest-free, driving a 32.5% YoY reduction in finance costs to INR 754mn on lower working-capitalfacility usage. Total debt remained modest at ~INR 2,550mn, with INR 6,530mn of sanctioned credit limits still available. Management targets a near-net-debt-free position over the next 2–3 quarters and retains FY27 guidance of INR 40–45bn revenue (25%+ growth) and 3–4% capex; it guided EBITDA margin to recover to 7%+ from H2FY27 as revenue scales and the Q1 employee-cost drag (5.4% of sales vs ~4.5% usual) normalises, while flagging the tax rate staying elevated through FY27 on non-deductible permanent differences.

Earnings call highlights

• Guidance: FY27 revenue guidance maintained at INR 40–45bn, with 25%+ growth to continue beyond FY27; all guidance is on a consolidated basis. Q1FY27 EBITDA margin of 6.4% was below the 7–8% guided band; management expects 7%+ from H2FY27 as revenue scales and employee-cost drag eases. Full-year 7–8% reaffirmed. Margin miss attributed to employee cost at 5.4% of sales (vs usual 4-4.5%) - first two months (Apr–May) saw low revenue conversion despite labour deployment. Capex guidance retained at 3– 4% of revenue (INR 280mn in Q1).

• Order book & inflows: Order book at INR 132.5bn; Q1 inflow soft at INR 6.3bn, ~93% from Adani. 6 projects completed in the quarter. FY27 inflow expectation ~INR 50bn (mostly Adani, +/- a bit); order book targeted at 70–75% Adani / rest external. Bid pipeline INR 62bn (61% group / 39% external). Commonwealth Games opportunity: no clarity yet, control room being set up in Ahmedabad, nothing on paper; explicitly excluded from inflow guidance. Execution is progressing across key sites - Matunga (the INR 20.26bn largest-ever order) at piling stage, Mahim foundation complete, SMC high-rise in finishing works (completion ~Jun-2027), and RVNL nearing handover of 2 of 3 buildings — supporting the H2 revenue ramp management is guiding to.

• Margins / business model: All Adani projects are pass-through (cost-plus); minimal raw material/geopolitical cost risk. ~30% external (non-Adani) book, ~INR 50–60bn, largely nearing completion. Adani projects run at ~6–7% EBITDA; PSP's own projects at 8–9%. Adani’s contribution is ~55–60% of Q1 revenue.

• Balance sheet: Mobilisation advance INR 8,360mn, entirely interest-free; finance costs down on lower working-capital-facility usage. Expects to turn near-net-debt-free over next 2–3 quarters. Total debt modest (~INR 2,550mn); INR 6,530mn of credit limits available. Tax rate to stay elevated full-year (~higher than 25%) due to permanent, non-deductible differences.

• Project / collection updates: Mumbai: Mahim foundation done; Matunga piling done. UP medical colleges (3 projects) near signing; receivables + unbilled collection expected to close by ~end-Aug / mid-Sep. SDB (Surat Diamond Bourse) receivables: ~INR 900mn outstanding, no clear timeline; management meeting client shortly.Precast: INR 1.5–2.0bn revenue expected for the full year, margins in line with overall business.

• Strategy: No new segments; stays in building construction (incl. data centres/commercial as buildings). Geographic focus Gujarat + Mumbai. Dharavi: 2 Adani projects worth ~INR 30bn in the book (~32,000 houses); PSP holds right of first refusal on further phases — a multi-year (5–6yr) opportunity contingent on execution on these first two. Team being scaled 1.5–2x to handle a larger Adani project pipeline.

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