PSP Projects - Strong Order Book, Execution Prowess, Stable Ebitda Margins Are Key Positives: HDFC Securities

HDFC Securities Retail Research

PSP Projects Ltd. is one of the key beneficiaries of increase in housing demand, government target of completing 8 million houses under the Pradhanmantri Awas Yojna and also the strong allocation towards affordable housing in the Union Budget. It is focusing on implementation on both engineering, procurement and construction, civil construction and turnkey institutional projects over next few years.

Its focus on margins and cash flow generation augurs well from a long-term perspective. Over the years, PSP Projects has transformed itself into one of the leading EPC players for private institutional, Industrial as well as Government residential projects.

PSP Projects has grown its order book and revenue at a healthy rate with sustainable margins. PSP has also calibrated diversification to continue the growth momentum, without assuming concentration risk, leading to superior scalability and recognition.

Robust execution capabilities coupled with strong repository of asset base enables efficient execution that would reflect in strong revenue growth.

PSP Projects has strong financials, healthy balance sheet and track record compared to its peer companies which gives also company a competitive advantage in bidding for new big projects upto Rs 2,500 crores.

Its continued focus on adding and diversifying project portfolio at healthy margins reinforces our positive view on the company.

We expect revenue/Ebitda/profit after tax to grow at a compound annual growth rate of 20.3%/24.7%/28% over FY23–25E.

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