Target: ₹800

CMP: ₹690.25

PSP Projects Ltd Q3FY23 numbers were below our expectations due to lower sales, an increase in construction expenses and a delay in getting approvals for UP projects. The company reported revenue of ₹500 crore (up 3 per cent YoY), EBIDTA of ₹62 crore (down 19 per cent YoY), and APAT of ₹35 crore (down 30 per cent YoY). It registered EBITDA margins of 12.4 per cent in Q3FY23 (our estimate: 12.5 per cent) as against 15.6 per cent in Q3FY22. The company reported APAT margins of 7.1 per cent in Q3FY23 against 10.4 per cent in Q3FY22. The decrease in other income is due to the reversal of impairment charges worth ₹2 crore to the company’s subsidiary.

The order-book break-up is as follows: 34 per cent from the government (₹1,704 crore), 18 per cent from the government residential (₹936 crore), 11 per cent from industrial (₹572 crore), 26 per cent from institutional (₹1,299 crore), and 11 per cent from residential (₹563 crore).

The company has a strong order-book comprising both public and private sector projects, which implies revenue visibility for the next two-three years. Going forward, with a robust bidding pipeline, strong execution, the government thrust on building infrastructure and revival of private Capex, we believe the company is well-placed to capture growth opportunities in the sector.