PSP Projects - Q1FY21 Result Update - YES Securities

PSP Projects (Q1FY21) - BUY Target (Rs520, Upside 28.4%)

PSP Projects reported standalone topline of ~Rs.1.1bn (down 65.2% yoy) largely impacted by COVID-19 led disruption. At the operating level, margin deteriorated to 1.2% (down 1267 bps yoy) with lower revenue and higher fixed cost. At the end of Q1 FY21, order book stood healthy at Rs.29.6bn (~2x FY20 revenues) with Gujarat state contributing 62% to the total order book. Bid pipeline stood robust at Rs.30bn for PSP. PSP has faced major challenges in terms of labor availability and supply chain disruption during Q1 FY21. However, the company has managed to remobilize ~75% of the total pre-COVID labor strength and expects full workforce by Aug'20-end.

PSP is setting up manufacturing plant of Precast Concrete Building and allied Infrastructure elements at Gujarat. The annual production capacity is estimated to be 3 mn sq. ft. (Phase -1 production capacity: 1mn sq. ft. targeted to be operational by May'21). The total capex is ~Rs.750 mn to be funded from internal accruals. Considering the COVID impact on topline and margin, we cut our estimates for FY21. We believe, the Company would witness robust growth in FY22 as the COVID related impact settles down. We believe, the Company is well placed to deliver backed by its robust order book, comfortable balance sheet position and superior execution capabilities. We maintain our BUY rating on the stock for target of Rs.520 (13x FY22 EPS).

Shares of PSP Projects Ltd was last trading in BSE at Rs.401.9 as compared to the previous close of Rs. 396.65. The total number of shares traded during the day was 461 in over 87 trades.

The stock hit an intraday high of Rs. 405 and intraday low of 394.35. The net turnover during the day was Rs. 184218.

Source : Equity Bulls

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