The shares of this construction company engaged in offering a diversified range of construction and allied services across industrial, institutional, government, government residential, and residential projects in India are in focus after the leading brokerage house, Prabhudas Liladhar (PL Capital) has assigned a significant upside potential of 66 percent from its current market price.

With a market capitalisation of Rs 2,440 crore, the shares of PSP Projects Ltd closed at Rs 618 per share, up 1.7 percent from its previous day’s closing price of Rs 607.80 per share.Over the past five years, the stock has delivered a muted return of 32 percent as compared to NIFTY 50’s return of 58 percent.

Brokerage Comments

PL Capital has a positive view about PSP Projects as they believe that the company is set to enter a strong growth phase driven by better execution and higher order inflows.

The brokerage cited that the management has not changed their FY26 revenue guidance of 30-31 billion and is anticipating a very good Q4 performance. Moreover, the company's revenue for FY27 is estimated to be 45-50 billion, while the growth rate from FY28 is expected to be around 20-25% consistently.

The order book of the company is quite strong at present as it has orders amounting to 90 billion (around 3.5x its revenue), which positions the company well for future growth. One of the main reasons for the growth is the deepening of the company's relationship with Adani Group, which now forms around 60% of the order book. This not only helps increase the pace of execution but also guarantees a continuous flow of work.

From a financial standpoint, PSP Projects is well placed with only a small amount of debt and an improvement of the working capital cycle. Since the company operates on a cost-plus model, margins are not expected to fluctuate much. However, the scale advantage will lead to better profitability. Given the strong growth prospects and the improvement in the key fundamentals, the brokerage has initiated a Buy call on the stock and has fixed a target price of 1,028, signalling a significant upside potential of 66 percent from its current market price.

PSP Projects Limited is one of the major diversified construction companies in India, having a wide range of services in different segments such as industrial, institutional, commercial, residential, and government sectors.

They are engaged in the construction of different types of projects, including factories, hospitals, educational institutions, malls, corporate offices, and large-scale housing development, including luxury and township projects. Also, the company executes government infrastructure and residential projects. Formed in 2008, PSP Projects is located in Ahmedabad and has established a flourishing brand in various construction segments nationwide.