PSP Projects - Q4 FY21 Result Update - YES Securities

(Rating: BUY, TP: Rs547, Upside: 25%)

- PSP Projects which has witnessed near normalcy in execution during the quarter posted a strong revenue growth of 9.7% yoy and 28.3% qoq. The total revenue for the quarter was in-line with our estimate and came in at Rs.5.0 bn. The total revenue for the year FY21 was Rs.12.4 bn.

- Operating margins have also improved and stood at 12.4% for the quarter, up by 133 bps yoy and 37 bps qoq.

- The company during the year has secured new orders worth around Rs. 24.4 bn and the total order book as at the end of FY21 stood at Rs.41.2 bn. The execution timeline for the order book is 24-30 months. Around Rs.7.3 bn worth of projects in the order book are slow-moving projects.

- Our view: The company has reached near normalized operation and posted a strong revenue growth for the quarter even with two slow moving projects. With the recent projects wins of around Rs.14.9 bn in UP, the company is now sitting on its highest ever order book with bill to book ratio of 3.3x, giving strong revenue visibility. The margins are likely to remain stable at 11-12% levels based on the current order book and pass through clause in projects. The robust order pipeline would ensure strong order flows in the next couple of years. We have largely retained our estimates for FY22 & FY23 and retain our BUY rating on the stock for target price of Rs.547 (13x FY23E EPS).

Shares of PSP Projects Ltd was last trading in BSE at Rs.421.2 as compared to the previous close of Rs. 436.55. The total number of shares traded during the day was 27465 in over 1238 trades.

The stock hit an intraday high of Rs. 433.95 and intraday low of 416.15. The net turnover during the day was Rs. 11660657.

Source : Equity Bulls

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