01 — At a Glance
From Building Government Offices to Being Owned By Adani: The PSP Story
- 52-Week High / Low₹1,031 / ₹577
- Q3 FY26 Revenue₹771 Cr
- Q3 FY26 PAT₹16.1 Cr
- Q3 FY26 EPS₹4.05
- TTM EPS₹9.11
- Book Value / Share₹309
- Price to Book2.11x
- Order Book (Dec 2025)₹9,178 Cr
- Order Book to Revenue3.5x (annual)
- Working Capital Days67 days
Flash Summary: PSP Projects had what management lovingly called its “best ever quarter” with ₹771 crore revenue (+24% YoY). Net profit hit ₹16.1 crore—up 159% YoY. But here’s the comedy: the stock is priced at 71.5x P/E, meaning the market has priced in not just future growth, but also future miracles, Lakshmi’s personal blessing, and PSP developing time travel technology. Meanwhile, the company is 68.8% owned by the Patel family, now joined at the hip with Adani Group (34.41% stake). Working capital has expanded to 67 days. Translation: the company is paying suppliers faster and customers slower—a guaranteed recipe for excitement.
02 — Introduction
The Construction Company That Became a Subsidiary Before Becoming Public
PSP Projects Limited is a Gujarat-based construction firm incorporated way back in 2008 by the visionary Prahalad S. Patel, who spent 30+ years pouring concrete and now spends his time watching the stock price fluctuate wildly. The company did what most Indian construction companies do: it built schools, hospitals, government offices, and the occasional temple. Boring. Profitable. Boring.
Then, in 2025, the Adani Group walked in through the front door. Not a polite knock. A full acquisition play. In June 2025, Adani Infra acquired 11.32% via open offer, then bought another 23.09% directly from the Patel family. By September 2025, Adani owned 34.41%—making them joint promoters. The Board of Directors was reshuffled faster than IPL playing XI changes. A new CEO was appointed. Someone from Adani. Suddenly, PSP went from “mid-cap construction stock” to “Adani’s construction arm on the public market.” The market celebrated by pushing the stock up. Then scared itself. Then decided 71.5x P/E was “reasonable.” We’ll get to that.
Q3FY26 was genuinely impressive. Revenue of ₹771 crore (up 24% YoY) from project execution, EBITDA of ₹52 crore, and PAT of ₹16.1 crore (up 159% YoY). But—and this is a big but—almost all of that profit improvement came from a weird accounting incident: the Indian government’s new labor code (notified November 2025) hit PSP hard with a one-time ₹7–8 crore employee cost charge for increased gratuity and leave provisions. Remove that? Net margin looks more normal. Still okay, but not “wow” level. Management says it’s non-recurring. We’ll see.
Feb 2026 Concall Clarity: Management explicitly stated they want a 59% (Adani) / 41% (non-Adani) order mix going forward. They are NOT chasing smaller government tenders anymore. This is a pivotal moment. PSP is transitioning from a “small-ticket, fragmented builder” to a “large-ticket, Adani captive EPC contractor.” That’s either brilliant or dangerous depending on whether Adani keeps winning.
03 — Business Model: WTF Do They Even Do?
They Build Stuff. Very Expensive Stuff. With Other People’s Money.
PSP operates as an EPC (Engineering, Procurement, Construction) contractor. You call them. You say “Build me an office tower in Ahmedabad.” They say “How much are you willing to pay?” You negotiate. They build. They collect cash as the project progresses. They cry when clients delay payments. This is the Indian construction business in three sentences.
The order book breakdown (as of Dec 2025) shows: 59% Adani group work, 41% external. By sector: Institutional (43%), Residential (26%), Government offices (12%), Sports/University/Hospital (9%), Metro and roads (6%), Riverfront and dam work (3%), Industrial (1.75%). By geography: 82% Gujarat, 14% Maharashtra, 4% others. Translation: PSP is a Gujarat powerhouse, is rapidly becoming Adani’s captive construction partner, and is being diversified geographically—but that diversification is still nascent.
Working capital management is a perpetual headache. As of December 2025, debtors stood at ₹635 crore, retention money at ₹163 crore, and mobilization advances at ₹524 crore. The GCA (Gross Current Assets) days ballooned from 237 days (FY24) to 278 days (FY25). This year, management expects it to improve to under 270 days. That’s good, but it’s still stretched. CARE Ratings downgraded the short-term rating (A1+ to A1) citing this exact concern: PSP is essentially financing its clients’ projects with its own working capital.
Adani Work59%of orderbook
External Work41%of orderbook
Government Sector27%of orderbook
Private Sector73%of orderbook
Fun fact from the concall: Management said Adani jobs are on “cost-plus” basis. That means commodity price volatility doesn’t hit margins—100% pass-through. Meanwhile, they’re deprioritizing small government tenders. Translation: PSP is shedding binary risk (will-they-pay-on-time) in exchange for counterparty risk (will-Adani-keep-ordering). That’s a trade-off, not a solution.
04 — Financials Overview
Q3 FY26: The Numbers Game With A Twist (Actually, A One-Off)
Result type: Quarterly Results | Q3 FY26 EPS: ₹4.05 | Annualised EPS (Q3 only × 4): ₹16.20 | TTM EPS (annual basis): ₹9.11
| Metric (₹ Cr) |
Q3 FY26
Dec 2025 |
Q3 FY25
Dec 2024 |
Q2 FY26
Sep 2025 |
YoY % |
QoQ % |
| Revenue | 771 | 623 | 694 | +23.8% | +11.1% |
| EBITDA | 52 | 35 | 48 | +47.1% | +7.6% |
| EBITDA Margin % | 6.73% | 5.67% | 6.92% | +106 bps | -19 bps |
| PAT | 16.1 | 6.3 | 15.2 | +159% | +5.9% |
| EPS (₹) | 4.05 | 1.53 | 3.76 | +164% | +7.7% |
The Plot Twist: That 159% PAT growth? Stunning. But here’s the catch: the labor code provision (one-time, ₹7–8 crore hit) in Q3 actually SUPPRESSED profit. Without it, the underlying margin improvement would have looked even nicer. Management explicitly said on the concall: “It shows 6.71% [EBITDA], but that is an impact of 1% directly because of this New Labor Code. It will be onetime effect only.” Translation: remove the labor code noise, and you get to ~7.7% EBITDA this quarter. Still solid, but a reminder that headline numbers can lie.
P/E Reality Check: TTM EPS = ₹9.11. Current Price = ₹651. P/E = 71.5x. The construction sector’s median P/E is 15.7x. PSP trades at 4.5x the median. Now, before you call your financial advisor, remember: PSP is not a mature, stable construction player anymore. It’s a turbo-charged Adani subsidiary in a phase where Adani is handing it projects like Santa on steroids. The market is pricing in multi-year order inflows and margin expansion. That’s either genius or financial fan fiction.
💬 If Adani projects are cost-plus and PSP is essentially a risk-transfer vehicle, why is the stock priced at 71.5x P/E and not trading more like a boring, low-growth utility? Is it Adani hype, or is there something in the order book that justifies this?
05 — Valuation: The Fair Value Gauntlet
What Is This Overhyped Construction Stock Actually Worth?
Method 1: P/E Based (TTM)
TTM EPS = ₹9.11. Construction sector median P/E = 15.7x. A 20–35% premium to sector median is justified for high-growth captive work. Justified P/E band: 18x–21x.
→ 18x × ₹9.11 = ₹163.98 21x × ₹9.11 = ₹191.31
Range: ₹164 – ₹191
Method 2: Price to Book Value
Book Value = ₹309. Current P/BV = 2.11x. For construction firms with ~5% ROE (PSP’s current level), a 1.2x–1.6x P/BV is fair. At 5% ROE, 2.11x P/BV looks stretched.
→ 1.2x × ₹309 = ₹370.8 1.6x × ₹309 = ₹494.4
Range: ₹371 – ₹494
Method 3: EV/EBITDA
TTM EBITDA ≈ ₹155 Cr. EV = ₹2,754 Cr. Current EV/EBITDA = 17.7x. For a captive EPC player with order visibility, 12x–16x EBITDA is fair. 17.7x is getting pricey.
→ Implies equity value per share of ₹180–₹250 range depending on working capital assumptions.
Range: ₹180 – ₹250
Consolidated View: Three valuation methods point broadly to ₹164–₹494 range, with the central estimate around ₹250–₹350. The current price of ₹651 sits well above even the upper bounds of most methods—unless the market is pricing in sustained 40%+ revenue growth and margin expansion to 8–9% over the next 3–5 years. That’s possible, but it’s not a base case. It’s an optimistic case. A fairy tale case. A “please-let-this-be-true” case.
⚠️ EduInvesting Fair Value Range: ₹250 – ₹450. This fair value range is for educational purposes only and is not investment advice. Please consult a SEBI-registered investment advisor before making any financial decision.
06 — What’s Cooking: News, Triggers & Drama
Adani Effect, Labor Code Chaos, and ₹61 Crore in Arbitration Gold
