Power Mech Q1 Results Review- Mine Development, Operation To Drive Growth, Margins In Medium Term: Nirmal Bang

Nirmal Bang Report

Power Mech Projects Ltd.'s revenue and Ebitda margin were below our estimates by 12% and 86 basis points, respectively.

Order inflow from Power: Non-power sectors stood at 54%:46% of the total order inflow in 132 days of FY25. Domestic: International revenue mix stood at 94%:6%. Power Mech secured orders worth Rs 17.5 billion in Q1 FY25, with the total order backlog standing at Rs 57.8 billion as on August 12th 2024.

Power Mech has received forest land clearance from the Jharkhand Government for the Kotre Basantpur mine and the over-burden activity is expected to start by early Q3 FY25 – a delay of about two months vs earlier expectation.

Post elections, Government of India infrastructure spending is expected to boost project opportunities in sectors such as Power, Railways and Urban Infra.

We believe that the outlook over the medium term remains robust on the back of healthy order booking and the scale-up in the MDO segment. Power Mech’s margin profile is expected to improve gradually as the share of MDO revenue increases (margin accretive business).

We maintain Accumulate on Power Mech with a target price of Rs 6,100, valuing it at 16 times June’26E earnings. We continue to remain structurally positive on the business model over the medium to long term.

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