Buy PSP Projects Ltd for the Target Rs.720 by Choice Institutional Equities
Key Conference Call Highlights
Financials:
* Management expects interest burden to reduce significantly in the next 2–3 quarters, aiding PAT improvement
* INR ~8 Bn mobilisation advances (non-interest bearing) to support cash flows and reduce financing costs
* Receivables increased due to timing of billing/collections; expected to normalize in the nest few quarters
* The provision of INR 290 Mn for credit loss forecast on the Kashi project affected Q4FY26 result
* UP Medical College project faced delay due to hospital renovation. Around INR 600 Mn unbilled revenue and INR 400 Mn receivables are pending
* Capex is expected at 3–4% of revenue
Order book:
? The current order book stands at INR 134.5 Bn by end of FY26 (vs. 72.7 Bn in FY25). Of this, 67% of the order book consists of within-group projects, while the remainder is external projects
? Government projects comprised 25% of the order book as in FY26 vs 43% in FY25
? Bid pipeline of ~INR 6.6 Bn provides visibility on sustained order inflow
? Commonwealth stadium project, estimated at INR 70–80 Bn, is a major upcoming tender which the company is eyeing
Operational Insights:
* Project Ninety comprising 3B+G+18 floors was executed in a short timeframe of 148 days
* There are 90+ ongoing projects; increasing adoption of precast/modular technologies is enhancing speed and efficiency
Guidance:
* FY27 revenue guidance maintained at INR 40–45 Bn; medium-term growth trajectory of ~20–25%. Long-term vision is INR 90-100 Bn revenue by FY30E
* EBITDA margins guided at ~7–8% with gradual improvement driven by operating leverage and efficiency
* PAT margin guidance of 4%–5% in the 2–3 years via interest cost reduction
* Strategy centred on selective bidding, execution efficiency and margin improvement over aggressive expansion
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