1. At a Glance
Gujarat-based PSP Projects has constructed 219 projects, secured awards, and built a precast facility—but can it construct investor confidence when profits are crumbling and margins are melting like bitumen in May?
2. Introduction with Hook
Imagine a builder so fast they win awards, so diversified they build for the government and the private sector alike, and so… modest they forget to pay dividends.
Meet PSP Projects—India’s “Fastest Growing Construction Company (Sub ₹2000 Cr)” in 2023. But behind the concrete exterior:
- Net profit dropped by 54% in FY25
- Margins shrank from 15% in FY22 to 7% in FY25
- Promoters offloaded 10% in 3 years
Looks like this construction story has more cracks than a builder’s handshake promise.
3. Business Model (WTF Do They Even Do?)
PSP Projects = All Things Infra (except roads & bridges)
Sectors served:
- Industrial: Factories, plants
- Institutional: Hospitals, education, healthcare
- Government: Urban housing, smart cities
- Real estate (small scale): Limited, non-core
Geography: Primarily Gujarat, now expanding into Maharashtra, UP, and South India.
Value Add:
- In-house design + precast construction tech
- Full EPC capabilities (except BOT)
New Angle: Mid-scale real estate projects in the USA via subsidiary (hmm… okay)
4. Financials Overview
| Year | Revenue (₹ Cr) | EBITDA (₹ Cr) | PAT (₹ Cr) | EPS | OPM % |
|---|---|---|---|---|---|
| FY21 | ₹1,241 | ₹135 | ₹81 | ₹22.6 | 11% |
| FY22 | ₹1,748 | ₹258 | ₹167 | ₹46.3 | 15% |
| FY24 | ₹2,506 | ₹261 | ₹123 | ₹34.2 | 10% |
| FY25 | ₹2,512 | ₹179 | ₹56 | ₹14.2 | 7% |
Trend:
- Revenues up, yes.
- But profits have HALVED in 2 years.
- Margins = construction-grade fragile.
5. Valuation
With a stock price of ₹817 and P/E of 57x, this isn’t just richly valued—it’s practically premium plywood.
Method 1: P/E Valuation
- EPS (TTM): ₹14.23
- Normalised P/E for construction: 15–20x
→ Fair Value Range: ₹210 – ₹285
Method 2: EV/EBITDA
- EBITDA: ₹179 Cr
- EV/EBITDA (industry): 8–10x
→ EV Range: ₹1,432 – ₹1,790 Cr
→ Market cap: ₹3,237 Cr = overcooked by ~80%
Verdict: Unless PSP launches a Taj Mahal, it’s priced for perfection.
6. What’s Cooking – News, Triggers, Drama
- Awarded “Fastest Growing Construction Company” by Construction World (2023)
- GST Penalties of ₹1 Cr+ in June 2025 for FY19–21; company appealing.
- Promoter Sell-off: From 70% to 60% in 2 years.
- Precast Tech: Plant in Gujarat still underutilized
- USA Subsidiary Projects: Ambitious, but no big gains yet
7. Balance Sheet
| Year | Equity | Reserves | Borrowings | Total Assets |
|---|---|---|---|---|
| FY21 | ₹36 Cr | ₹500 Cr | ₹84 Cr | ₹991 Cr |
| FY23 | ₹36 Cr | ₹765 Cr | ₹145 Cr | ₹1,765 Cr |
| FY25 | ₹40 Cr | ₹1,169 Cr | ₹272 Cr | ₹2,353 Cr |
Key Observations:
- Borrowings up 3x in 2 years
- Reserves have doubled
- Equity diluted slightly in FY25
Clean balance sheet but leverage is rising.
8. Cash Flow – Sab Number Game Hai
| Year | CFO | CFI | CFF | Net CF |
|---|---|---|---|---|
| FY22 | ₹147 Cr | -₹164 Cr | -₹11 Cr | -₹28 Cr |
| FY23 | ₹45 Cr | -₹51 Cr | ₹12 Cr | ₹6 Cr |
| FY24 | -₹224 Cr | -₹26 Cr | ₹269 Cr | ₹19 Cr |
| FY25 | ₹53 Cr | -₹106 Cr | ₹20 Cr | -₹33 Cr |
Caution:
- FY24 cash flow from ops: negative ₹224 Cr
- Financed via debt – not sustainable
- FY25 better, but not stellar
9. Ratios – Sexy or Stressy?
| Metric | FY22 | FY24 | FY25 |
|---|---|---|---|
| ROCE | 35% | 19% | 9% |
| ROE | 15% | 12% | 5.3% |
| CCC (Days) | -53 | 3 | 61 |
| Debtor Days | 82 | 50 | 77 |
From Hero to Zero:
Working capital cycle ballooning. Return ratios halved. Something is definitely… under construction.
10. P&L Breakdown – Show Me the Money
| FY | Revenue | OPM % | PAT | EPS |
|---|---|---|---|---|
| FY22 | ₹1,748 Cr | 15% | ₹167 Cr | ₹46.3 |
| FY23 | ₹1,938 Cr | 12% | ₹132 Cr | ₹36.7 |
| FY24 | ₹2,506 Cr | 10% | ₹123 Cr | ₹34.2 |
| FY25 | ₹2,512 Cr | 7% | ₹56 Cr | ₹14.2 |
Revenue’s up. Profits, not so much. EPS slashed to 1/3rd in 2 years. Growth without profit is like a mall without a food court.
11. Peer Comparison
| Company | CMP | P/E | ROCE | OPM | Sales (₹ Cr) | PAT (₹ Cr) | EPS | ROE |
|---|---|---|---|---|---|---|---|---|
| L&T | ₹3,470 | 31x | 14.5% | 13.4% | ₹2,55,734 | ₹15,224 | ₹107 | 16.5% |
| NBCC | ₹113 | 50x | 33.5% | 5.2% | ₹12,038 | ₹610 | ₹6.5 | 25.9% |
| Techno Electric | ₹1,528 | 47x | 16.5% | 14.9% | ₹2,268 | ₹378 | ₹26 | 12.8% |
| PSP Projects | ₹817 | 57x | 8.7% | 7.1% | ₹2,512 | ₹56 | ₹14.2 | 5.3% |
Mic drop: Highest valuation, lowest margins, lowest ROE. Bravo.
12. Miscellaneous – Shareholding, Promoters
| Shareholder Class | Mar 2023 | Mar 2025 |
|---|---|---|
| Promoters | 67.6% → 60.1% | |
| FIIs | 2.5% → 7.8% | |
| DIIs | 4.5% → 8.0% | |
| Public | 25.4% → 24.0% |
Positives: Institutions entering
Negatives: Promoters exiting quietly from the backdoor
No dividend in 2 years despite ₹1,169 Cr reserves. Investors still waiting for their mithai box.
13. EduInvesting Verdict™
PSP Projects looked like a promising infra challenger—agile, precast-savvy, and Gujarat’s finest. But post-COVID, the story’s been running on fumes.
- Margins falling
- EPS cut to 1/3rd
- Debt rising
- Promoters trimming stake
The precast business, international ventures, and institutional demand could revive mojo—but the next 2 quarters need to deliver concrete results, not cemented excuses.
Verdict: A fast-growing builder now stuck in a traffic jam of poor margins and rich valuations.
Metadata
– Written by EduInvesting Research | 18 July 2025
– Tags: Construction Stocks, PSP Projects, Gujarat Infra, Precast India, SmallCap Infra, Institutional Projects, Cement Stocks, Infra Buildout
