Axis Securities Recommends Buying This Stock For 28% Upside, In 1 Year

Brokerage firm Axis Securities suggests buying the stocks of PSP Projects Limited (PSPPL) for a 28% return. The firm thinks, "The company's robust financial position is reflected in its lean balance sheet, low Debt: Equity ratio, high return ratios, and adequate interest coverage ratio."

Target Price

The Current Market Price (CMP) of PSP Projects Limited (PSPPL) is Rs. 484. Axis Securities has estimated a Target Price for the stock at Rs. 620. The stock is expected to offer a 28% upside, in 1 year.

Stock Outlook
Current Market Price (CMP)	Rs. 484
Target Price	Rs. 620
1 year return	28.00%

Company performance

The company's Net Sales in FY 21 stood at Rs. 1,241 crore, which is expected to grow at Rs. 1,752 crore in FY 22. PSPPL's Net Profit in FY 21 stood at Rs. 83 crore, while it is expected to grow at Rs. 159 crore in FY 22. Their EBITDA in FY 21 was Rs. 135 crore, which is anticipated to be at Rs. 248 crore in FY 22. As of Dec'21, PSPPL has a robust order book of Rs. 4,008 Crore (3.2x of FY21 revenue) comprising both public and private sector projects and reflects healthy revenue visibility for the next 2-3 years. The company has a market capitalization of Rs. 1748 crore.

Comments by Axis Securities

Axis Securities commented about the stock's potential, "We believe PSPPL is well-placed to take advantage of the government's focus on infrastructure development, revival in the real estate industry, emerging opportunities in construction space by leveraging its asset-light business model and strong management pedigree. With favourable attributes such as strong and diversified order book position, healthy bidding pipeline and order inflows, asset-light model, a higher proportion of stable public order book, emerging opportunities in the construction space, efficient and timely execution, and majority of Capex completed, we expect the company to deliver Revenue/EBITDA/APAT growth of 26%36%/37% CAGR over FY21-FY24E."

About the company

PSP Projects - incorporated in 2008, has been working in the construction business for more than 30 years. The company has built a diversified order book including Institutional, Industrial, Government Infra and residential projects, and Private residential projects located in six different geographies. Recently, the company has also commissioned a pre-cast facility (investment outlay of Rs. 109 Crore) to support and enhance its existing business.

(Also read: Motilal Oswal Suggests Buying This Stock For 35% Return, In Near Term)

Disclaimer

The above stock was picked from the brokerage report of Axis Securities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.