PSP Project Ltd. (PSP) is a multidisciplinary construction company offering a diversified range of construction and allied services across industrial, institutional, government, government residential and residential projects in India. PSP provides services across the construction value chain, ranging from planning and design to construction and post-construction activities to private and public sector enterprises. Historically, PSP has focused on projects in the Gujarat region. PSP has recently diversified its portfolio of services across geographies and is undertaking or has bid for projects pan India. The company’s standalone total order book as of March 31, 2017 was Rs. 729.2Cr, which comprised of 17 institutional projects, 4 industrial projects, 4 government projects and 2 government residential projects. Further, subsidiaries and JV’s have total order book of Rs. 90.9Cr and Rs. 107.4Cr respectively as of March 31, 2017.
Outlook and Valuation: In terms of valuation, PSP’s P/BV multiple annualised 9MFY2017 at 7.9x, works out to be at premium to peers (Ahluwalia Contracts 5.2x, Nila Infra. 3.3x, JMC projects 1.4x, Prakash Controwell 0.4x, RPP Infra 3.7x). Moreover, PSP is aspiring to get in the higher ticket size projects, which is dominated by well reputed players. Management’s lack of experience in diverse geographies and lack of visibility of future order book may become a cause of concern for growth strategy. Hence, we recommend NEUTRAL rating on the issue.
