PSP Projects – Construction Company

All aspects of the business are looking good. But there are two points I have trouble imagining the company’s sustainability.

1. Free Cash Flow: For a growing company, free cash flow can be somewhat on the lower side. Free cash flow of Rs. 58.05CR vs PAT of Rs. 620.08CR in 9 years is not good. Around 10% of the PAT has been converted into free cash flow.
2. Expansion of the business: For the growth of the company, they have to bid on big orders. I don’t find any big construction business efficiently growing. They have to enter into competitive bidding subsequently. The bidding market seems like many suppliers and low demand. The company depends on the CAPEX plans of the other industries and the government infrastructure. This seems like a terrible industry to me.
3. Key Man Risk: P Patel is a great person. For the growth of the company, the company needs to employ talented people like P Patel.
   Disclosure. Invested but am now uncertain about holding further.
   Need counter-arguments.