Power Mech Projects Q2 Results Review - Expects Order Inflow To Pick Up In H2: Nirmal Bang
On July 31, 20’23, Power Mech won Rs 304.38 billion MDO contract from SAIL, which is executable over 28 years.
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Nirmal Bang Report
Power mech Projects Ltd.'s revenue grew by 20.9% YoY to Rs 9.3 billion. Ebitda margin expanded by 90 basis points to 12.1%. Adjusted profit after tax grew by 16.8% YoY to Rs 512 million.
Power Mech won its second mine development and operation order worth Rs 304.38 billion on July 31, 2023, which is executable over 28 years. Ex-MDO order inflow in Q2 FY24 stood at Rs 14.3 billion, down 78.5% YoY on account of a high base. Ex-MDO order backlog declined by 9.5% YoY to Rs 133.8 billion. Level one position at the end of Q2 FY24 stood at Rs 18 billion plus.
Power Mech has raised Rs 3.5 billion via QIP at a floor price of Rs 3,881.17/share on October 23, 2023.
We believe that the outlook over the short to medium term remains robust on the back of healthy order booking and pick-up in international business going ahead, but execution remains key.
Further, the company’s margin profile will improve gradually going forward as the share of MDO revenue kicks in (which is margin accretive). We continue to maintain a 'Buy' on Power Mech with a revised target price of Rs 4,665 (versus Rs 4,705 earlier), valuing it at 10 times September-25E earnings.
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