- About the concern regarding FCC: The construction industry is a FCC-deficit industry where money circulate in cycles. It involves an intensive working capital. The contract sum received in one project goes into repayment of liabilities involved with that project to the vendors, lenders and outsourcing partners. A major chunk of the remaining money goes into Security Deposit, Earnest Money Deposits, procurements, etc. concerning the next project in pipeline. As such, not lot of cash is left free.
In simple words , FCF is the cash readily available after the company has paid for its OPEX and CAPEX. So, This is what I tried explaining in the paragraph above. The cash freely available is less in the construction industry. Hence, FCF for PSP being on the lower side is justifiable and not a point of concern.
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Taking support of the previous point, it is evident that the CAPEX and OPEX are happening and the growth is visible in the topline and bottomline of the company. Also, the company is having a rock-solid order book of 5081 Cr. This is because of their aggressive bidding strategy. “The bidding market seems like many suppliers and low demand.”. I love this statement. Its 100% true. The cherry on the cake here is that PSP is one of Govt.’s most eligible supplier.
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Mr. Patel is a revolutionary leader. Agree with you here.
Disc: I am in the Construction Industry and have very carefully felt and observed the FCF pattern in the entire industry. Also, Invested.
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