Target: ₹3,350
CMP ₹2,705.10
Power Mech Projects Ltd (POWM) is a leading infrastructure construction company based in Hyderabad with a global presence. The company’s orderbook is largely backed by orders from power segment which accounts for 76.8 per cent of total mix.
Q2-FY25 consolidated revenues grew at 11 per cent y-o-y to stand at ₹1,035 crore, aided by strong execution in the erection segment. PAT stood at ₹70 crore in Q2-FY25 and ₹131 crore in H1-FY25, registering 36/28 per cent y-o-y growth, respectively. The current order book stands at ₹58,067crore.
As of Q2FY25, the order book backlog is at 13X TTM revenues, providing significant revenue visibility. We forecast execution to scale up in the second half of FY25 as we move past election-induced slack.
Additionally, contributions from MDO business can help POWM unlock 23 per cent CAGR revenue growth in the FY24-27 period. We build in EBITDA margin expansion of 252bps in this period enabled by contributions from profitable segments like O&M and Mining (after it reaches peak rated capacity — EBITDA/PAT margins are expected to be in the range of 22/13 per cent). The earnings are expected to grow at 41.3 per cent and for ROE to improve significantly to 20.3 per cent in FY27.
