PSP Projects Limited 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. It provides its services across the construction value chain, ranging from planning and design to construction and post-construction activities, including MEP work and other interior fit outs to private and public sector enterprises. Historically, it was more focused on projects in the Gujarat region. More recently, it has actively expanded its geographical presence to other states and diversified its portfolio of services.
Its execution capabilities have grown significantly with time, both in terms of the size of projects that it bids for and executes, and the number of projects that it executes simultaneously.
PSP is currently constructing the world’s biggest office complex (Surat Diamond Bourse) having Contract Value of Rs. 1575 Cr and 66 Lakhs Sq. Ft Built-up area.
The Company is a small-cap with a market capitalisation of Rs 2850 crore and a free float of Rs 911 crore. The promoters hold 66.22% of the capital while the public holds 33.76%. Amongst the public, ABAKKUS EMERGING OPPORTUNITIES FUND-1, the PMS Fund promoted by Sunil Singhania, holds 5,45,000 shares comprising 1.51% of the equity capital.
ICG Q LIMITED, a FII, holds 4,36,568 shares comprising 1.21% of the equity capital.
High conviction Smallcap Idea
According to a research report by ICICI-Direct, PSP Projcts is on a strong growth trajectory. They have described it as a “high conviction small-cap idea”.
It is stated that PSP is well placed for healthy growth at decent margins to be driven by strong executable order book position. Healthy order inflows secured at FY23 and Q1FY24 coupled with robust bidding pipeline brightens company’s prospects. It is also pointed out that at the CMP, the company is trading at a valuation of ~12x FY25E P/E.
ICICI-Direct has recommended a BUY on the company at a valuation of 15x P/E on FY25E to arrive at target price as Rs 975/share.