Buy This Real Estate Stock For Potential Upside Of More Than 16%: ICICI Securities

In the latest report of ICICI Securities, the brokerage firm recommended buying a company's stock in the real estate sector. ICICI Securities has issued a buy call with a target price of Rs. 760 and is highly bullish on PSP Projects Ltd.

The stock appears to be in a strong position; over the past few months, the price has demonstrated strong upward momentum and is in a clear uptrend. The stock price is trading near its all-time highs, and as per the latest report of ICICI Securities, it has the potential to gain more than 16% from the current market price.

Here is a detailed breakdown of the latest report of ICICI Securities on PSP Projects Ltd.

Outlook of PSP Projects Ltd.

PSP Projects is one of the fastest-growing construction companies in India, with over 153 projects completed to date. Incorporated in August 2008, PSP Projects Limited is an Indian construction business that provides various construction and related services for institutional, industrial, government residential, governmental, and residential projects.
The company also develops real estate projects in the United States through its subsidiaries.

Outlook of PSP Projects Stock

PSP Projects is a low market cap company with over Rs. 2,326 Crores capitalisation. The current market price of the stock is Rs. 646. The stock's all-time high price is Rs. 674, and the all-time low is Rs. 416. The stock has a Return On Equity of 25.6% and a Return On Capital Employed of 34.7% over 5 years.

The stock is trading at its all-time highs, and per the report of ICICI Securities, it can reach up to the target price of Rs. 760.

Buy Call of ICICI Securities On PSP Projects

According to the latest reports of ICICI Securities, 'PSP is set to enter the big leagues mainly backed by:

a) Its rich construction experience,
b) Eligibility to bid for higher-ticket size projects with improvement in prequalification criteria
c) Geographical diversification.

Additionally, the company is well placed for robust growth with a healthy order book position, strong revenue visibility and decent margins. Healthy order inflows secured at YTD FY23 level and a robust bidding pipeline brighten the company's prospects. At the CMP, the company is currently trading at a valuation of 12.9x FY24E P/E. We have a BUY recommendation on the stock with revised target price of | 760 (15x FY24E P/E) vs. Rs. 710, earlier at 14x FY24 P/E'.

Key Triggers For Future Performance Of PSP Projects

As per the latest reports of ICICI Securities there are three key triggers. The report says,

• 'PSP's prequalification for public projects has increased to | 2,300+ crore. Addition of big ticket sized project to boost its overall order book position.

• Diversification in select states offers a bigger opportunity pie. Further, significant traction in the pre-cast facility to bring incremental revenue.

• Expect revenue CAGR of 15.3% in FY22-24E'.