PSP Projects Share Price

Dear investor,

Please find below mentioned short term fundamental stock for delivery purpose.

 

Company	CMP	Target	BSE Code	NSE Code
PSP Projects Ltd.	381	490	540544	PSPPROJECT

 

PSP Projects Ltd is a multidisciplinary construction company offering a diversified range of construction and allied services across industrial, institutional, government, government residential and residential projects in India. The service offerings is across the construction value chain, ranging from planning and design to construction and post-construction activities to private and public sector enterprises. The company predominately has presence in Gujarat region but slowly expanding to other parts on pan India basis. IDFC emerging businesses fund is the largest non-promoter shareholder with 2.25% shareholding. Market cap of PSP is Rs 1,350 cr.
 

Investment rationale
 

Strong track record: The Company in its 12 years of existence has delivered 142 projects and 47 projects are on different stages of execution. The Company over the years has successfully executed a number of prestigious projects across Gujarat. The ticket size of an average project has also moved to a multi-level high from INR 8.5 cr in FY13 to INR 43 cr currently.

 

Asset light model, attractive order book: The Company generally undertakes EPC contracts which do not require high capex commitments. The gross block to sales ratio stands at quiet comfortable levels and thus helps it to generate attractive return ratios. As at Mar 2020, the company has an unexecuted order book of Rs3,073 crore which is >2x of its FY20 consolidated sales and thus offers good near term revenue visibility. Interest coverage ratio of 10.9x reduces the worries over the rise in debt. PSP now carries strong capabilities to participate in high value projects (worth Rs400-500 crore) across India.
 

Efficient capital allocation to generate high returns: Timely execution and proficient project selection aid in efficient capital management for PSP. As a result of a lean balance sheet, prudent working capital management and profitable execution, the return metrics (25-30% RoCE) of the company are the best in the sector and are expected to remain healthy going forward.
 

Material impact of COVID -19: Construction industry (especially the building sector) has lost three productive months of the year which is going to hit the sector in an unpleasant way. According to the current estimates, the management believe that the operations of the company may return to normalcy by Q2FY21. Thus, COVID-19 situation is expected to affect the profitability during the first half of this year only. But with strong track record and asset light model, PSP is likely to sail through it in efficient manner.
 

Robust financials and reasonable valuation: The Company, in its last three years (FY17-20) of operation, has registered 48.6% CAGR in net sales to Rs1,499 crore from Rs457 crore while net profit grew 46% CAGR to Rs128 crore during the same period along with generation of high return ratios. In Q4FY20, topline/EBITDA/PAT registered a robust growth of 34%/1.5%/14%. At current price, the stock trades at P/E multiple of 10.5x on TTM earnings.​

 

Duration of recommendation: Short to Medium term.
 

Best Regards

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Dainik Bhaskar · 21 घंटे पहले

शेयर मार्केट/ सप्ताह में कारोबार के पहले दिन बीएसई 552 अंक और निफ्टी 159 पॉइंट नीचे बंद हुआ, बैंक ऑफ इंडिया शेयर में 20% का उछाल रहा