Dolat Capital's research report on PSP Projects
PSP reported revenue above estimates and EBITDA margins below estimates however; PAT was in line with estimates. ? PSP posted 34.9%/ 1.3%/ 13.7% YoY growth in revenue/ EBITDA/ PAT to Rs 4.6 bn/ Rs 505 mn/ Rs 343 mn in Q4FY20. SBD revenue - Rs 1.7 bn vs. Rs 1.2 bn (Q4FY19). ? We reduce our revenue/ EBITDA margin/ PAT estimates by 9.8%/ 112 bps/ 18.2% for FY21E on account of lockdown due to covid-19. The company is facing labour shortage (currently with 20% labour) and expects the labour strength to improve to 70-80% by end of Jun'20. We broadly maintain our FY22E estimates. We expect a 5.9%/ 8.1% revenue/ Adj. PAT CAGR over FY20-22E, with EBITDA margins of 12.3%/ 13.2% for FY21E/ FY22E. ? Given its conservative strategy towards leverage and an efficient capital allocation, PSP will continue to remain a net cash company, with negative Net D:E of 0.5x over FY20-22E. PSP will continue to witness superior return ratios (average RoE/ RoCE of 23.6%/ 23.7% over FY20-22E), due to a steady PAT growth, well-managed lean balance sheet and efficient working capital management.
Outlook
We maintain BUY, with a downward revised TP of Rs 504 (12x FY22E EPS). Not factored any equity dilution. Key risk - Laour shortage.
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