Buy PSP Projects, target price Rs 705: HDFC Securities

HDFC Securities has buy call on PSP Projects with a target price of Rs 705. The current market price of PSP Projects Ltd. is Rs 508.35. Time period given by analyst is one year when PSP Projects Ltd. price can reach defined target.

PSP Projects Ltd., incorporated in the year 2008, is a Small Cap company (having a market cap of Rs 1836.90 Crore) operating in Construction sector.

PSP Projects Ltd. key Products/Revenue Segments include Contract Revenue and Other Operating Revenue for the year ending 31-Mar-2021.


Financials
For the quarter ended 31-03-2022, the company reported a Consolidated Total Income of Rs 559.37 Crore, up 13.08 % from last quarter Total Income of Rs 494.69 Crore and up 10.91 % from last year same quarter Total Income of Rs 504.36 Crore. Company reported net profit after tax of Rs 54.83 Crore in latest quarter.

Investment Rationale
PSP Projects (PSP) reported revenue/EBITDA/APAT of INR 5.6/0.8/0.5mn, beating estimates at all levels. Its entire order book (OB) of INR 43.2bn (excl. Bhiwandi and Pandharpur forming 17% of it) is under execution, which led to strong revenue booking. EBITDA margin, at 15.9%, was strong on account of higher proportion of private orders executed. PSP has handed over the Surat Diamond Bourse (SDB) project and the final completion certificate is expected by Jun-22 end. After this, it will become eligible to bid for single project worth more than INR 20bn. The current bid pipeline stands at INR 45bn, of which 51% orders are from Gujarat and 52% are private. The topline is expected to grow by 20-25% YoY in FY23, with order inflow at more than INR 20bn. It maintains BUY on PSP with an increased TP of INR 705/sh (13x Mar-24E EPS).

Promoter/FII Holdings
Promoters held 70.2 per cent stake in the company as of 31-Mar-2022, while FIIs owned 1.78 per cent, DIIs 4.77 per cent.