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Execution-led beat; attractive risk reward

PSP Projects reported its highest-ever quarterly revenue in Q2FY27, with standalone revenue +45% YoY to INR 10.1bn, 16% ahead of our estimates, supported by improved labour availability (23,000–25,000 workers deployed across sites vs 16000 as Q1FY27). EBITDA margin stood at 6.7% (-26bps YoY), and management guided for margins of ~7% in H2FY27 and 7.5–8% over the medium term, driven by projects transitioning from the structural phase to MEP and finishing stages. Though order inflows was subdued at INR 6.75bn / INR13bn in Q2FY27/1HFY27, largely comprising Adani group projects; however, the bid pipeline expanded to over INR 78bn (52% group / 48% external) from INR 62bn in Q1FY27. The order book stood at INR 128.7bn (~3.6x TTM revenue), up 30% YoY, with intra-group projects accounting for ~72%. Management reiterated its commitment to deliver 25–30% revenue growth post FY27 (FY27 target INR44-45bn). Following the recent stock price correction, we see a favourable risk-reward and upgrade our rating to BUY, with a TP of INR 1,061, valuing the stock at 18x 1HFY29E EPS. At the current price, the stock trades at an attractive 11x FY29E EPS, factoring 31% EPS CAGR over FY26–29E.

Q2FY27 beat across the board; PAT nearly doubles:

Revenue grew 45.5% YoY to INR 10,091mn, ahead of our estimate of INR 8,671mn. EBITDA stood at INR 673mn, up 40.0% YoY, with margin at 6.7% versus 6.9% YoY and our estimate of 6.5%. Employee cost rose 50% YoY on annual increments and higher headcount, and the quarter carried an INR 81mn provision for doubtful advances. PBT at INR 386mn was 41% above our estimate, helped by a 36% YoY fall in interest cost to INR 76mn, despite higher depreciation (INR 263mn, +34% YoY on asset additions). PAT came in at INR 290mn, +95% YoY and 43% above our estimate, as the effective tax rate normalised to ~25% (~37% in Q1FY27).

Order book dips QoQ on soft inflows; bid book expands:

Order book stood at INR 128.7bn, +30% YoY but ~3% lower QoQ (INR 132.5bn in Jun-26), still ~3.6x TTM revenue with execution spread over ~2.5 years. Within-group projects make up ~72% (INR 92.3bn) and external 28%; by segment, institutional (39%) and residential (36%) dominate, with government at 23% and industrial at 3%. Q2 inflow was INR 6.75bn (H1: INR 13.05bn), mainly Adani orders across healthcare, airport infrastructure, offices, refurbishment and staff accommodation. Management expects FY27 inflow of INR 40–50bn, implying INR 27–37bn in H2. The bid pipeline rose to INR 78bn+ (52% group / 48% external) from INR 62bn in Q1, with a higher external share; a third Dharavi project, Mumbai airport work and CWG-related tenders are potential additions. Geographically, ~70% of the book is in Gujarat and ~25% in Maharashtra.

Mobilisation advances fund growth; debt stays low: Mobilisation advance rose to INR 9,330mn (INR 8,360mn in Q1) and is entirely interest-free; Adani pays ~10% upfront and clears ~75% of bills within 7–10 days, keeping working capital in check. Gross debt was ~INR 2.68bn (LT INR 0.30bn incl. INR 0.14bn current maturities; ST INR 2.38bn), against fixed deposits of INR 2.37bn (INR 1.93bn under lien). PSP cut sanctioned limits by INR 1.1bn to INR 13.87bn as they were no longer needed, with INR 4.92bn still available. Net unbilled revenue rose to INR 6.32bn, as government clients’ bill certification and rate finalisation lag; management expects it to normalise. H1 standalone operating cash flow was -INR 250mn. H1 capex was INR 910mn (Q2: INR 620mn), and management kept 3–4% of revenue as the ongoing capex run-rate. SDB receivables (~INR 900mn) remain unresolved, while most UP medical-college dues have been collected, with the balance expected by Q3FY27

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