PSP Projects tanks 17%, hits over 2-month low on heavy volumes; here's why

In Q1, PSP Projects reported weak earnings due to a decline in revenue given the labour shortages and delays in project execution

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Shares of PSP Projects hit over two-month low of ₹626.6, as they tanked 17 per cent on the BSE in Monday's intra-day trade amid heavy volumes. The stock of the civil construction company is quoting at its lowest level since May 9, 2025.

 

At 10:14 AM, PSP Projects was trading 10 per cent lower at ₹682.90, as compared to a 0.16 per cent rise in the BSE Sensex. A combined 2.09 million equity shares representing 5.3 per cent of the total equity of PSP Projects have changed hands on the NSE and BSE. 

 

The stock price of the small-cap company had hit a 52-week high of ₹842.50, touched on July 17, 2025, in anticipation of large order wins from the Adani Group.  Track LIVE Stock Market Updates Here

PSP Projects Q1 results 

In the June quarter of the current financial year (Q1FY26), the company reported consolidated revenues of ₹517. 8 crore, down 17 per cent year-on-year (Y-o-Y) and up 23 per cent quarter-on-quarter (Q-o-Q), well below analysts’ estimates. Revenue decrease was due to labour shortages and delays in project execution, due to the early monsoon season in Gujarat and seasonal factors such as the wedding season and post-march migration.

 

On the operational front, Ebitda for Q1FY25 was reported at ₹24.8 crore, down 66 per cent Y-o-Y and 23 per cent Q-o-Q. Adjusted profit after tax (PAT) for Q1FY26 stood at ₹37 lakh, down 99 per cent Y-o-Y and 93 per cent.

PSP Projects management comments

The company has an outstanding order book of ₹6,514 crore, a Y-o-Y growth of 11 per cent. Of the current outstanding order book, Adani projects comprise 27 per cent, and the balance is non-Adani projects.

 

During Q1FY26, the management said the company faced a labour shortage of 37 per cent in the months of April and May 2025. At present, the company is at a 19 per cent labour shortfall. The management said they are confident that this shortfall will further reduce starting August 2025.

 

During the quarter, the employee cost spiralled to 6.8 per cent, which is usually in the range of 4 per cent to 5 per cent. On account of new order wins from Adani, the company has hired employees at various levels.

 

Secondly, the majority of the newly awarded projects that started after March 2025 were all under the initial stage of construction, where the deployment of labour is always on the higher side, while the labour availability was less during the same period. Hence, the company faced a negative impact on its profitability. 

Corporate strategic partnership

The Adani Infra (India),  a subsidiary of the Adani Group, has acquired 4.49 million equity shares pursuant to the Open Offer from public, which is representing 11.32 per cent of the paid up equity share capital of the company and further 9.68 million equity shares, representing 24.41 per cent of the paid up share capital of the company to be acquired from promoters of the company.

Choice Equity Broking's view on PSP Projects

Analysts are not too excited with the way the deal has been structured, with promoter (Mr. Prahladbhai S Patel) selling a sizeable stake (up to 30 per cent shareholding, which is about 50 per cent of his stake) to Adani Infra while minority shareholders did not get an attractive deal.

 

PSP Projects management has indicated that business from the Adani Group will be executed on a cost-plus basis. Adani Group is a cost champion and would strive to get the best deal for its shareholders, which implies potential pressure on the PSP Project’s margins, in brokerage view.