PSP Projects soars 9% to hit record high on strong revenue visibility

Shares of PSP Projects rallied 9 per cent to hit a record high of Rs 740.15 per share in Tuesday’s intra-day trade, in an otherwise weak market, on strong revenue visibility. The stock of civil construction company surpassed its previous high of Rs 724, which it had touched on December 13, 2022. In comparison, the S&P BSE Sensex was down 1 per cent at 61,173 at 11:34 am.

PSP is currently engaged in providing construction and allied services across industrial, institutional, government, and residential projects. PSP is engaged in planning, designing, construction and post construction activities in the construction value chain and has executed around 196 projects till September 30, 2022.

So far in the financial year 2022-23 (FY23), PSP received total orders worth of Rs 1,833.09 crore. PSP expects to capitalise on its unprecedented growth. The company possesses a robust balance sheet – debt-equity ratio, which is attractively maintained at 0.15 at the close of FY22– that makes it possible for the company to grow profitably and sustainably.

On December 14, ratings agency, CARE Ratings reaffirmed ratings of bank facilities and instruments of PSP’s to CARE A+ with a 'stable' outlook.

"The ratings assigned to the bank facilities of PSP continues to remain underpinned by its established presence in the civil construction industry, operational track record of over a decade with demonstrated execution capability and healthy revenue visibility with orders from reputed clientele,"the ratings agency said.

Moreoever, the ratings continue to derive strength from its stable scale of operations [growth of 41 per cent during FY22 (FY refers to the period April 01 to March 31)] along with healthy profitability, low leverage, healthy debt coverage indicators, strong liquidity position, experienced promoters, and increased thrust of government on infrastructure development.

Analysts at CARE Ratings also expect that PSP would benefit in the medium term by the government's thrust on healthcare, education sector, and reconstruction of marquee government buildings under central vista scheme.

"The above rating strengths, however, continue to be tempered on account of high geographical concentration of PSP’s order book (in Gujarat and Uttar Pradesh) along with inherent counterparty risk associated with execution of projects from state authorities, relatively moderate scale of operations, owing limited segmental and geographical diversification, working capital intensive operations and presence in intensely competitive and fragmented construction industry," the ratings agency added.