PSP Projects Q4 Results Review - Guidance Lowered: IDBI Capital

IDBI Capital Report

PSP Projects Ltd.'s Q4 FY24 profit after tax came lower than our and consensus estimate by 60% plus. This is due to weak execution and lower Ebitda margin at ~8% versus 11% YoY and 10% QoQ.

Margin was muted due to execution of order in Uttar Pradesh, which PSP expects to get concluded in Q1 FY25, as 90% of projects are completed. In order win, PSP is amongst few companies which has surpassed its FY24 order inflow guidance of Rs 30 billion.

For FY25E PSP is guiding order inflow of Rs 35 billion. Despite order win, PSP guides FY25E revenue growth of 15% versus 28% revenue growth in FY24 and margin of 10-11% (earlier guidance of 11-12%).

This has made us to cut the EPS and target price is revised to Rs 714 (earlier Rs 860). We value PSP at 14 times PER and lower rating to Hold from Buy earlier.

Stock catalyst remains execution better than guidance and stability in the margin.

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