Power Mech Projects Ltd. share price target

Power Mech Projects Limited is a company that offers a wide range of services in both the power and non-power sectors. They are the biggest service provider in operations and maintenance (O&M) and have integrated their services both forward and backward.

EBITDA margin improved to 10.6% (vs 5% in the previous quarter last year) due to lower employee expenses and material costs. Higher other income (182% YoY) and the lower tax rate of 23.9% supported PAT to rose to Rs31cr YoY (vs. Rs33cr loss in Q1FY21). Management expects execution to ramp up going forward and guided Rs1,400cr of revenue in H2FY22 led by strong tender pipeline. We revised our rating to Accumulate Due to the recent uptick in...

Power Mech Projects Ltd is a leading infrastructure-construction company based in Hyderabad with global presence. Q4FY21 revenue grew by 27% YoY backed by strong execution in O&M; (29% YoY) and Civil business (75% YoY). Order book remains healthy at Rs7,333cr (3.9x FY21 revenue) led by strong inflow of Rs4,638cr in FY21, which provides revenue visibility for the next two to three years....

Focus on O&M; and Civil orders to drive growth Power Mech Projects Ltd is a leading infrastructure-construction company based in Hyderabad with global presence. Company has an order backlog of Rs.7,353Cr (as on 16th Feb 2021), which shows revenue visibility for next 3 years. Company enjoys market leadership position in power O&M; (Operations and Maintenance) and erection business with a market share of 55%-60%. Diversification of business to non power segment, especially civil (including railway, petro chemical, water etc) has helped the company to be in the growth track ....

Whilst PMPL's EBITDA margin marginally declined by 25bps YoY to 12.8% owing to sales mix, it remains healthy due to higher contribution of international projects, high-margin Civil & Other Works and O&M; business. Looking ahead, the Management expects margin to improve owing to shift in revenue-mix to high-margin O&M; business and growth in non-power business. Its reported PAT grew by 67% YoY to Rs284mn. Total consolidated debt stood at Rs2.8bn as of 2QFY19-end vs. Rs 3.1bn as of 1QFY19-end with net debt/equity ratio coming in at 0.2x, which provides a significant headroom for growth. As the Management is confident of utilising internal...

Good order inflows, growth traction in place Power Mech Projects Ltd (PMPL) for Q1FY19 on a consolidated basis reported good numbers. Revenue grew ~29% YoY to 462 crore, on the back of better order execution. Revenue from erection segment (39% of Q1FY19 revenue) grew 26%, operation & maintenance (O&M; -28%) grew 6%, civil (31%) grew 60% and electrical works (2%) grew 220%. EBITDA grew 32% to 61 crore, with margins expanding 34bps to 13.2%, due to better project mix. Net profit grew 34% to 24 crore. As of 30 Jun'18 debt stood at 310 crore (vs 274 crore as of 31 Mar'18)....

Consolidated revenue of Power Mech Projects (PMPL) surged by 28.9% YoY to Rs4.6bn, aided by higher revenue from ETC (+ 25.9% to Rs1.8bn) and Civil & Other Works (+ 60.2% to Rs1.4bn business. Further, revenue from O&M; segment rebounded by 5.8% YoY to Rs1.2bn post the Rs200mn impact led by temporary project shutdown in 4QFY18. Looking ahead, we believe dominant position in power EPC business, impressive order book and superior execution capabilities will drive PMPL's profitability. We maintain our BUY recommendation on the stock with an upwardly revised Target Price of Rs1,178 (from Rs1,080 earlier). Robust Revenue on Improved Execution...

PMPL's EBITDA margin expanded by 111bps YoY to 13.1% owing to higher contribution of international projects, high-margin Civil & Other works and O&M; business. While EBITDA grew by 44.9% YoY to Rs641mn, PAT surged by 48% YoY to Rs299mn, above our estimate. Looking...

Healthy Revenue Visibility on Improving Execution & High Order Book Power Mech Projects (PMPL) continued to deliver a healthy performance in 3QFY18 as well. Its consolidated revenue rose by 12.9% YoY to Rs3.5bn led by strong growth in Civil & Other Works and O&M; business segments. Despite a flat YoY growth, revenue from ETC segment improved on QoQ basis to Rs1.4bn, as the issues relating to GST-led execution delay has gradually ebbed out. Looking ahead, we believe that dominant position in power EPC business, impressive order book and superior execution capabilities will drive PMPL's profitability. Rolling over our estimates to FY20E, we maintain our HOLD recommendation on the stock with a revised...

Power Mech Projects (PMPL) has delivered a healthy performance in 2QFY18. Its consolidated revenue rose by 6.3% YoY to Rs3.5bn (vs. our estimate of Rs3.6bn) owing to strong growth in Civil & Other Works and O&M; businesses. However, ETC revenue dipped by 15.5% YoY to Rs1.4bn owing to GST-led execution delay and lower domestic thermal power capacity addition. Looking ahead, we believe dominant position in power EPC business, impressive order book and superior execution capabilities will drive PMPL's profitability. Assigning higher multiple (11x P/E of FY19E from 9x earlier) owing to strong traction in order book and improving margin...

PMPL's EBITDA grew by 9.4% YoY to Rs459mn. However, EBITDA margin remained flat at 12.8% on YoY comparison. PBT surged by 21% YoY to Rs309mn on lower interest cost. However, PAT marginally grew by 7.4% YoY to Rs182mn owing to higher minority interest (Rs32.3mn). The...

Power Mech Projects (Power Mech) reported flat yoy sales for 2QFY2016. The company reported a top-line of Rs317cr, which is up 0.3% yoy from the year ago levels. The EBITDA, at Rs43cr in 2QFY2016, grew 13.0% yoy. Despite flat sales, the EBITDA margin of the company expanded on a yoy basis to 13.5% for 2QFY2016. In-line with EBITDA growth, Power Mech reported a PAT of Rs18cr for the quarter, reflecting 23.3% yoy growth. A 3.2% yoy decline in depreciation expenses (to Rs9cr) and decline in effective tax rate (from 35.4% a year ago to 33.9% in the quarter) helped the company report a 107bp yoy PAT margin expansion. Power Mechs order book as of 2QFY2016-end stood at Rs3,700cr, reflecting order book to LTM ratio of 2.2x. Valuation: On considering Power Mech 2QFY2016 order book of Rs3,700cr (which gives strong earnings growth visibility), negligible debt on the books, and higher return ratios (RoE of Power Mech is higher than that of its peers), we assign a 9.0x 1-year forward P/E multiple to our FY2017E, EPS estimate of Rs72/share to arrive at a price target of Rs649/share. Given the limited upside, we maintain our Neutral rating on the stock.