Shares of PSP Projects rallied 9% in intraday trade on Tuesday to hit an all-time high of Rs 740.15 per share in an already weak market and strong revenue visibility. Shares of the civil construction company surpassed the previous high of Rs 724 touched on December 13, 2022. In contrast, the S&P BSE Sensex was down 1% at 61,173 at 11:34 am.

PSP currently provides construction and related services for industrial, institutional, government and residential projects. PSP is involved in planning, design, construction and post-construction activities in the construction value chain and has executed around 196 projects since September 30, 2022.

So far, in the financial year 2022-23 (FY23), the total order value received by PSP is Rs 1,833.09 crore. PSP hopes to capitalize on its unprecedented growth. The company has a solid balance sheet – with a debt-to-equity ratio of an attractive 0.15 at the end of FY2022 – with the potential for profitable and sustainable growth.

On December 14, rating agency CARE Ratings reaffirmed PSP’s rating on banking facilities and instruments as CARE A+ with a “stable” outlook.

The rating agency said, “The rating assigned to PSP’s bank facilities is driven by its established presence in the civil construction industry, demonstrated operational track record of over a decade of operational track record and healthy revenue visibility with orders from prestigious customers.”

In addition, the rating continues to benefit from its stable operating scale [41% growth in FY22 (April 1 – March 31)], healthy profitability, low leverage, healthy debt coverage metrics, strong Mobility conditions, experienced drivers and more significant government push for infrastructure development.

Analysts at Care Ratings also expect PSPs to benefit in the medium term from the government’s thrust on the healthcare and education sector and reconstruction of key government buildings under the Central Vista scheme.

“However, the rating mentioned above strength continues to be constrained by the high geographic concentration of PSP orders (in Gujarat and Uttar Pradesh) and the inherent counterparty risk associated with executing projects by state authorities, the relatively modest scale of operations, limited segmentation and geographic diversification, working capital intensive business and presence in the highly competitive and fragmented construction industry,” the rating agency added.