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PSP Projects Ltd

| Q3 FY26 Earnings Conference Call

BULLISH SENTIMENT

Report Source

⬤5th Feb 26

Summary : PSP Projects delivered strong Q3 FY26 results with record revenue and robust order book growth, maintaining an optimistic outlook for future revenue and margins, supported by strategic partnerships and project execution.

Management Perspective positive : Management expressed confidence in achieving revenue targets for FY26 and provided strong guidance for FY27. They highlighted best-ever quarterly revenue and significant order book growth, attributing success to improved execution and strategic partnerships. The tone remained optimistic despite discussing challenges like increased employee costs or order book adjustments.

Concall Report Analysis & Insights

Business Overview

  1. Q3 FY26 revenue reached INR771 crores, a 24% year-on-year increase.
  2. Nine-month FY26 revenue stood at INR1,978 crores, growing 9% year-on-year.
  3. Outstanding order book as of December 31, 2025, was INR9,178 crores, up 43% year-on-year.
  4. Improved performance driven by strong project execution and better labor deployment.
  5. Completed 5 projects in Q3 FY26, including Veer Savarkar Sports Complex.

Future Growth Prospects

  1. Company maintains FY26 revenue guidance of INR3,100-3,200 crores.
  2. Anticipates FY27 revenue of at least INR4,000-4,500 crores.
  3. Current bid book is INR6,600 crores, with 40% from external projects.
  4. Lowest bidder for Ambaji Corridor Development Project valued at INR965 crores.
  5. Discussing an additional Dharavi project (Matunga block) worth INR2,000 crores.

Management Insights

  1. Confident in achieving FY26 revenue guidance of INR3,100-3,200 crores.
  2. EBITDA margin expected to be 8-9% from next year onwards.
  3. Commodity price hikes for Adani Group projects are 100% pass-through.
  4. Received a favorable arbitral award of INR61.44 crores plus interest from Bhiwandi case.
  5. Precast facilities are 80-90% utilized for captive and Adani projects.

Signs of Skepticism

  1. Analyst noted a discrepancy in order book reduction (INR800 crores) versus management's initial lower figures (INR100-150 crores, then INR143 crores).
  2. Questions arose regarding the sustainability of EBITDA margins given increased depreciation and finance costs.

Risk Factors

  1. One-time increase in employee benefits expense due to new labor code in Q3 FY26.
  2. Potential for project execution shortfalls (8-10%) due to labor availability or fund issues.
  3. Some projects may face delays from design, clearance, or approval issues.
  4. Order book adjustments due to project scope reductions or cancellations.

Good To Know

  1. Q3 FY26 EBITDA increased 47% YoY to INR52 crores, with margin at 6.73%.
  2. Net profit for Q3 FY26 increased 159% YoY to INR16 crores.
  3. Incurred INR80 crores capex in Q3 FY26, YTD capex is INR153 crores.
  4. Total sanctioned credit facilities are INR1,497 crores, with INR500 crores available.
  5. Outstanding order book is 27% government, 73% private; 82% Gujarat, 14% Maharashtra.

Key Drivers

  1. Strong order book growth.
  2. Adani Group partnership.
  3. Favorable arbitration award.
  4. Robust project execution.

Key Analyst Discussions

Competitive Environment

  1. Questions regarding the split of Adani and non-Adani order book.
  2. Inquiries about bidding strategy for government and smaller projects.
  3. Discussions on maintaining market presence with Adani Group partnership.

Market Trends & Consumer Behavior

  1. Questions about labor availability and its impact on project execution.
  2. Inquiries on the impact of rising commodity prices on project margins.

Financial Highlights

  1. Questions on FY26 and FY27 revenue guidance, including Adani/non-Adani split.
  2. Inquiries about EBITDA margin trends and impact of new labor code.
  3. Discussions on capex targets and depreciation run rates for future quarters.
  4. Clarification on cash and cash equivalents and arbitration award reporting in P&L.

Product Composition

  1. Questions on the nature of Adani Group projects (real estate vs. institutional/capex).
  2. Clarification on the types of projects undertaken by the subsidiary (MEP, material supply).

Strategic Considerations

  1. Questions about the progress and new order intakes for the Dharavi project.
  2. Inquiries about the tendering and expectations for Commonwealth Games projects.
  3. Discussions on the role and revenue contribution of the PSP Projects and Proactive subsidiary.