PSP Projects Upgrade to Buy with Target Price of Rs 1,028: Prabhudas Lilladher

PSP Projects (PSPPL) Financial Update

Summary

PSP Projects' management hosted a non-deal roadshow with investors, reaffirming its strong growth outlook. Key factors supporting growth include improving execution, order inflow, and increasing contribution from the Adani partnership.

Financial Guidance

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The company maintains its FY26 revenue guidance at INR30-31 billion, with a strong Q4 execution run-rate of approximately INR11 billion expected, representing a 65% year-over-year increase. For FY27, revenue guidance is reiterated at INR45-50 billion. From FY28, PSPPL expects to deliver 20-25% annual growth.

Order Inflow and Pipeline

Order inflow remains strong at approximately INR50 billion achieved during 9MFY26. Guidance is to receive inflow of INR40-50 billion in Q4FY26 and INR60-80 billion for FY27. The bid pipeline provides healthy visibility for future growth. The order book expanded significantly to approximately INR90 billion in Q3FY26, representing 3.5 times trailing twelve months revenue.

Partnership and Margins

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The share of Adani projects continues to increase, with 60% of the current order book attributed to Adani. This partnership improves execution efficiency, working capital dynamics, and supports stable margins at approximately 8%, driven by a cost-plus model and operating leverage as scale improves.

Outlook and Recommendation

We expect growth to accelerate to approximately 30% compound annual growth rate (CAGR) over FY26-28E, supporting a premium valuation. Our recommendation is BUY, with an unchanged target price of INR1,028, based on a 20x exit price-to-earnings multiple on FY28E earnings per share.