PSP Projects (PSPPL IN) – Q1FY27 Result Update – Softer margins; Guidance intact – Downgrade to ‘ACCUMULATE’
Published on 30 Jul 2026
PSP Projects delivered a strong Q1FY27 operationally, with revenue growing 53% YoY, reflecting healthy execution momentum despite monsoon and labour-migration seasonality. Reported EBITDA margin stood at 6.4% (+166bps YoY) but came in below our 7.0% estimate and management's 7–8% guidance, as first-two-months revenue conversion lagged and employee cost ran elevated at 5.4% of sales; management expects margins to recover to 7%+ from H2FY27. Order inflow was muted at INR 6.3bn (~93% Adani); order book remained robust at INR 132.5bn (~4x TTM revenue, +103% YoY), with within-group projects at 70%. Management retained FY27 revenue guidance of INR 40–45bn (25%+ revenue growth post FY28E) and its net-debt-free target over the next 2–3 quarters, aided by interest-free mobilisation advances that continue to lower finance costs. The bid pipeline stands at INR 62bn (61% group), while the INR 70–80bn Commonwealth Games opportunity remains a potential upside yet to convert and is excluded from inflow guidance. We keep our earnings estimates and FY28E EPS largely unchanged. Stock is up 65% in FY27E so far, we change our rating to Accumulate (from BUY) on an unchanged earnings estimate and target price of INR 1,062 (20x FY28E EPS).
