PSP Projects rallies 11%, nears record high on strong order book position

In the past 11 trading days, the stock price of PSP Projects has zoomed 31 per cent after promoters bought shares from the open market.

Shares of PSP Projects moved higher by 11 per cent to Rs 617 on the BSE in Tuesday’s trade on healthy order book position of over Rs 5,000 crore. The stock of civil construction company traded near to its record high level of Rs 639 that it had touched on February 1, 2022.

In the past 11 trading days, the stock price of PSP Projects zoomed 31 per cent on promoters stake buy from open market. Between June 20 to June 30, 2022, the PPP Family Trust (through Mrs. Shilpaben P. Patel - Trustee) and SPP Family Trust (through its Trustee, Mr. Prahaladbhai S. Patel) have collectively acquired 90,399 equity shares worth of Rs 4.69 crore of PSP Projects via open market, according to disclosure made by company to the stock exchanges.

As on March 31, 2022, PSP’s order book stood healthy at Rs 4,324 crore and improved over five-times over the past five years. So far in the financial year, the company has received work orders worth Rs 549.62 crore. The company said that it has emerged as lowest bidder [L1 bidder) for a Government Medical college and hospital in Gujarat with bid value worth Rs 615.18 crore.

Moreover, the company's bid pipeline remains equally strong (worth Rs 4,500 crore) as economic activity improves in target states like Gujarat, Uttar Pradesh and Maharashtra post Covid-19 related slowdown. With this, there are ample business opportunities given strong reputation associated with quality work and track record of successful execution.

Analysts at ICICI Securities expect that the improved momentum in order inflows would continue with better opportunities coming from both - government and private clients, their expansion into different states, and improved eligibility of higher-ticket size projects.

Going forward, the brokerage firm anticipates that the improved momentum in execution would continue and enable the company to post 15.3 per cent CAGR over FY22-24E (to Rs 2,325 crore in FY24E) with comfortable order book position, healthy inflows and pick-up in execution.

“PSP is set to enter the big leagues, mainly backed by its rich construction experience, eligibility to bid for higher-ticket size project with improvement in pre-qualification criteria, geographical diversification, healthy order book position, strong revenue visibility and decent margins and healthy return ratios,” analysts added.