PSP Projects Limited (PSPPROJECT.BO) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to PSP Projects Q3 FY '26 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Arpit Mundra. Thank you, and over to you.

Thank you, Hina, and good evening, everyone. Welcome you all to PSP Projects Limited Q3 FY '26 earnings conference call. To take us through the results and answer your questions, we have with us management of PSP Projects represented by Mr. Prahaladbhai Patel, Chairman and MD; Ms. Pooja Patel, CEO; and Ms. Hetal Patel, CFO. We note that the discussions that we may have today may continue certain forward-looking statements relating to future events and future performance. Numerous factors could cause actual results to differ materially from those in the forward-looking statements. Please note the audio of the earnings call is the copyright material of PSP Projects and cannot be copies, rebroadcasted, attributed in press or media without specific and written consent of the company. Now I would like to hand over the call to Ms. Pooja Patel, CEO, for her opening remarks. Thank you, and over to you, Pooja.

Thank you, Arpit, for the introduction. Good evening, everyone, and welcome to the earnings conference call of PSP Projects Limited to discuss the financial performance of the third quarter and 9 months ended December '25, we concluded our Board meeting earlier today. Let me begin with the financial highlights of quarter and the 9 months of the year. During Q3 FY '26, the company delivered its best ever quarter revenue, reporting INR 771 crores from the operations, representing a 24-year (sic) [ 24% ] year-on-year growth and an 11% quarter-on-quarter increase. For the 9 months ended December '25, revenue stood at INR 1,978 crores, reflecting a 9% year-on-year growth. The improved performance was driven by strong project execution supported by better workfront ability and improved labor deployment. As of 31st December '25, the company's outstanding order book stood at INR 9,178 crores, registering a 43% year-on-year growth. Of this, within-group project accounts for 59% while the external project constitute of remaining 41%, that is INR 3,738 crores. We observed that the breakup of the order book is missing in the current investor presentation. Accordingly, we are sharing the details of major external projects for your reference. SMC high rise building INR, 835 crores, Gati Shakti Vishwavidyalaya, INR 325 crores, deployment of Dharoi -- sorry, development of Dharoi Dam region INR 280 crores, construction of Fintech building at GIFT City, Gujarat, INR 264 crores, Sabarmati Riverfront Development, Phase 2, INR 245 crores. Company orders inflow during quarter 3 FY '26 amounted to INR 957 crores, marking of 151% year-on-year increase. Since inception, company has completed INR 253 crores, with 82% from the private client and remaining from the government clients. As of the quarter end, the company is executing 67 ongoing projects, of which 88% are in Gujarat, while the remaining 12% as spread across Karnataka, Utter Pradesh, Delhi and Maharashtra. During quarter 3 FY '26, the company successfully completed 5 projects, including major projects among those includes Veer Savarkar Sports Complex Ahmedabad, 1 of the first stadium for Commonwealth 2030, and aiming Olympics of 2036. Terminal 1 and Terminal 2 forecourt area development at Ahmedabad Airport, Studio Building for CEPT University, Industrial Project for Tea Processing Facility for Waghbakri Group. The company currently has a bid book of INR 6,600 crores with 60% from group projects and 40% on external projects. We are pleased to say that within the external bid book, the company has emerged as the lowest bidder for Ahmedabad -- sorry, Ambaji Corridor Development Project valued at INR 965 crores. Now let me share a certain project level update. SMC, we have completed major work of [indiscernible] for the project. And currently MEC and finishing work is going on and [ facade ] work will be starting soon. RVNL, out of 3 building, 2 buildings [indiscernible] is completed, third building is going on as per schedule. Currently, MEP and finishing activities are going on. For Dharoi Project, Phase 1 is a -- on a handover phase and Phase 2 project all the major activities are going on as per schedule. Other than that, in the matter of PSP versus Vivendi BNCMC, PSP projects received a favorable at Arbitral Award, Arbitral Award dated 11th January 2026. The Arbitral Tribunal has directed BNCMC to pay PSP Projects a principal amount of INR 61.44 crores, Additionally, BNCMC is required to pay interest at 9% per annum, 1/3 up to the date of award with 60 days from the date of award. With this, I would like to now hand over the call to our CFO, Ms. Hetal Patel, to share the financial performance of the company.

Thank you Pooja. Good afternoon, everyone. The financial performance during the quarter ended December 31, 2025, is as below. Quarter 3 FY '26 versus Quarter 3 FY '25. Revenues from operations for the quarter is INR 771 crores versus INR 623 crores, which has increased by 24% on a Y-o-Y basis. EBITDA for the quarter is INR 52 crores versus INR 35 crores, increased by 47% on a Y-o-Y basis. EBITDA margin is at 6.73% versus 5.67%. Net profit for the quarter is INR 16 crores versus INR 6 crores, increased by 159% on a Y-o-Y basis. During the quarter under review, employee benefit expense has increased from INR 33 crores to INR 41 crores on Y-o-Y basis, mainly due to increase in provisions for gratuity and leave encashment as a result of application of new Labor Code notified in November '25. Increase in depreciation from INR 19 crores to INR 24 crores year on Y-o-Y basis is mainly attributable to additions in asset block during the current financial year. During quarter Q3 FY '26 company have incurred CapEx of INR 80 crores. And year-to-date CapEx additions is INR 153 crores. Gross block stands at INR 762 crores and net block is INR 414 crores as on 31st December '25. I would like to mention a few of the important balance sheet numbers as on December 31, '25. Long-term borrowing is INR 25 crores, including short-term maturities of INR 16 crores. Short-term borrowing is INR 364 crores, excluding short-term maturities of INR 16 crores. Net unbilled revenue INR 648 crores. Trade receivables are INR 635 crores, and trade payables are INR 436 crores. Retention is INR 163 crores. Mobilization advance is INR 524 crores. Inventories of INR 344 crores comprised of INR 175 crores of construction materials, INR 149 crores of work in progress and INR 20 crores of finished goods. Out of total sanctioned credit facility of INR 1,497 crores, company utilized nonfund-based facilities of INR 703 crores and fund-based facilities of INR 294 crores, and limit available for utilization is INR 500 crores. As on December 31, '25, the company has total 64 fixed deposit of INR 215 crores, out of which, lien-free deposits are of INR 43 crores and FDs worth INR 147 crores are under lien with the banks for credit facilities and FDs worth INR 25 crores is given as a security deposit to the client. Work on hand as on December 31, '25, is INR 9,178 crores. This comprises 27% order values from government projects and 73% from private projects. Work on hand within Gujarat comprises of 82%, Maharashtra 14%, and rest from -- rest 4% from other states. Outstanding value of projects from entities within group comprises 59% and external projects are 41% of the total work on hand. That concludes the update on the financials. And we are now open for the question-and-answer session. Thank you.

[Operator Instructions] The first question is from the line of Shravan Shah from Dolat Capital.

A couple of questions. So first, on the guidance front. So last time, we said around INR 3,200 crores revenue for FY '26. So considering 9% growth in 9 month of the fourth quarter, the ask rate is too much. 86% kind of a growth, INR 1,200 crores-odd something. So first, on the revenue front, how much are we looking at for the fourth quarter? So for the entire FY '26, and if possible, for FY '27, how one can look at the revenue? And that too also if possible if you can bifurcate in terms of the Adani and non-Adani Revenue, that would be helpful, sir?

Shravan, first of all, to answer the first question related to overall revenue for this year, I think we have committed around INR 3,100 crores to INR 3,200 crores, we'll stick to that figure because we are confident that the projects which are now in [indiscernible] will be able to make up by [indiscernible]. For the revenue [indiscernible] is [indiscernible], but mostly, it will be somewhere in the range of INR 4,000-plus crores. We're sure because of the order book which we have and the commitment which we have made for next year.

Sorry, sir, for this year, you said INR 2,300 crores?

INR 3,100 crores to INR 3,200 crores, which I already committed in last call also, that we stick to that. So probably there won't be any problem in getting that revenue as far as the planning is concerned, the pace of work which has been going on, and most of the projects are in the [indiscernible] phase finishing. So it will be able to make up that revenue. And for next year, it is too early to mention about the revenue, but when we complete this through 2026, but looking to the commitment, which we had done, it should be somewhere in the range of INR 4,000 crores to INR 4,500 crores minimum [indiscernible].

Okay. Got it. So the way the work is going on, sir, so in the fourth quarter, we should be able to do INR 1,100 crores to INR 1,200 crores kind of a run rate to get INR 3,100 crores, INR 3,200 crores?

Right. Right.

Yes. Sir, second is on the order inflow and margin. So still we are not able to see the improvement in the margin. So in the fourth quarter, how one can look at the EBITDA margin and for next year or maybe the next 2 years also, if somebody has to look at 8% to 9% margin, which we normally used to guide, is it possible to achieve in the '27, '28? And for fourth quarter, how one can -- given the revenue will be a significantly higher, so we can -- can we see a kind of 8%, 9% EBITDA margin in the fourth quarter itself?

Please, Shravan, if you have heard the Hetal, she already mentioned that there is an incremental operating expense in -- because of employees benefit, which is to the tune of INR 8 crores, which is this quarter only. If you led to INR 54 crores, which we have already shown as EBITDA, it comes to INR 62 crores. So if you consider that part also, then we have almost reached to 7.71%. So what we told you that we'll be near to 7% to 8% this quarter and probably on an average 8% to 9%, that's still achievable. So though it shows 6.7%, 1% -- interest or 1% directly because of this new Labor Code.

And sir, this INR 8 crores labor loss from fourth quarter, this run rate will continue? Or this is for the onetime that we have done?

No, no, it will be onetime effect only. We have already taken the effect, this past service cost, so that we have taken to the P&L. And now from next quarter onwards, there won't be any effect of this.

Okay. Okay. And sir, now in terms of we already have a INR 5,000 crore order inflow. So in the fourth quarter, how much more are we looking at? And this INR 965 crores would have been saved in the start that we have already got from the Adani. So just to clarify on that.

Out of the INR 955 crores, I think the bifurcation is like [indiscernible].

[indiscernible]

How much is Adani [indiscernible] and how much is [indiscernible].

[indiscernible]

It is 100% Adani Group only.

Okay. So 1 can say that we have got close to INR 5,900 crores, [ INR 65 crores, ] so INR 6,000 crores, we are -- our order inflow till now. So how much more one can look at by March end?

Out of this, INR 3,000 crores, which is under discussion.

So INR 3,000 excludes this INR 965 crores or it includes?

It excludes.

Okay. Okay. And then next year onwards, this INR 7,000 crores, INR 8,000 crores run rate one can look at in terms of the order inflow?

We should look at it as per our performance if we're able to make with the requirements of the group. I think INR 7,000 crores, INR 8,000 crores is to be considered for next year.

The next question comes from the line of Vaibhav Shah from JM Financial.

So the issue that you are facing on the UP project. So now there are no overruns in Q3, right?

Right.

So only one-off in the quarter was regarding the labor court, otherwise, the other costs are normal?

Yes.

And secondly, on the depreciation front, now this run rate should continue of INR 24 crores, INR 25 crores per quarter?

Yes, it should continue because we have already added INR 153 crores in the current financial year. So it will impact every quarter going forward...

So what CapEx are we targeting for the entire year?

Yes. This is basically to be utilized for the next 2 years, most of the projects which we have started for Adani Group, all these projects regarding new shuttering materials, new equipments like crane and other equipment. So this will be -- most probably, this will remain as a part of depreciation. But at the same time this revenue will start in next year.

And CapEx target for the entire year?

Sorry. CapEx amount for entire year?

Yes.

So for 9 months, we have expanded INR 153 crores and further around INR 40 crores to INR 50 crores we might be incurring.

Around INR 200 crores for the entire year?

Yes.

And going ahead, '27, '28 also, this should continue? Or we may see some fall in the CapEx [indiscernible]?

If you consider the part of the project which we have received from Adani Group, which is in the tune of INR 6,000 crores and if you consider the 2% to 3% as the equipment part, I think that's what we have spend. So probably from next year onwards, there will be a little bit less CapEx cost for this project, which has already started, but for any new project which is coming up from the group, I think there will be requirement of CapEx, as well as [ deferred ], but maximum, as a tune of -- overall, we will stick to 3% to 4% of our overall revenue, which we all will pay and which is what we have spent every year in past few years also.

Okay. And sir, lastly, regarding the Bhiwandi award, so INR 61.4 crores, so this should directly come to us, or the client can again go in arbitration and go in the further court?

The court has given a commitment payment time of 2 months. So after 2 months, if they do not go to the court, this has to be reimbursed. And for again, beyond 60 days, that interest rate is announced at 11%. Presently the interest for -- after the announcement till date is 9%. Later on, once the 60 days is over, it is 11% interest. So let us wait and watch whether they go to other court and not.

Okay. And sir, what would be our receivables from the SDB now? I think some amount was pending.

The receivables still remains the same what we were having in last quarter. Only thing is now, it will be paid as -- with interest as they are committed, but it is as -- same as last quarter.

Sir, what was the number?

INR 90 crores.

INR 90 crores.

The next question comes from the line of Rahul Kumar from Vaikarya Funds.

Just on execution, I think whatever the execution we have done in Q3, is it in line with your expectation? Or were there any challenges during the quarter?

No, it has been our expectation as in the last quarter also I shared that we will be -- whatever things have happened in last 2 to 3 quarters because of the extra costs which we have incurred in the projects related to UP, now that has been streamlined. And overall, the project [indiscernible] which we are doing is 60% from Adani Group and most of the projects in Gujarat from other, non-Adani. I think it is as per expectation, all within this INR 8 crores provision made that it has maybe [indiscernible] it has made. Otherwise 7% plus 1% is about 8%, which I've already said that we'll try to match 8% to 9% from next year onwards.

Okay. Okay. Sir, I was actually, in terms of more on execution of the projects. Is that in line with your expectations?

Pardon me?

I was saying, in terms of the project execution, how much you have done the construction and completion of the project. Is it in line with your expectations? Or were there any challenges?

See, it is always better to have more and more, we said, we can do better and better. But what happened is usually the environment, which there's the deployment of labor, availability of labor and the weather, these 3 permit, we've always wish that one should go on smoothly. But depending on the type of project, sometimes some of the projects may have not have clearance in terms of design or in terms of clearence, in terms of approvals that can hit during the good season for construction. But overall, I feel that we may have fall about INR 50 crores less, otherwise it is within my expectation.

Okay. Okay. Okay. And so during the quarter, I mean, were there any issues of favorability? And has that sort of improved?

No, I don't think so, maybe it believe depending on type of project and the fund availability, there can a shortfall of 8% to 10%, but not as such as the crisis of labor, as we generally see in the season of April to June. So overall, it can be a shortfall of 8% to 10% depending on situation and location of the project.

Okay. Okay. And I think you mentioned that there's 14% projects which we're doing -- are done in Maharashtra. So just with respect to that, how is the receivable situation over there?

Yes. I think the major projects which we are doing today is the mine, and that project already, the [indiscernible] has [indiscernible] excavation because the last layer of excavation is going on. So probably by March, we should be in the position to start a foundation, and we'll be able to generate more revenue from then onwards.

Okay. Okay. But are you facing any challenges on the cash flow front on that project?

No. As such, there is no requirement. There is -- as such today, there is no problem of cash flow in that project because it's investment from Adani Group that majority of money [indiscernible] from Adani Group.

Okay. Got it. And I think, in this quarter, you have seen a decline in the gross margin on a Q-o-Q basis, I think, by 70 bps. So what would have driven that?

As I already told you, there was a hit of INR 7 crores to INR crores on the -- because of the labor court decision, that has given you a drop of 1.5%, otherwise last year, it was 6.5% to 6.71%, it could have been 7.71% if that impact of labor court would not have been taken.

Actually, I was more referring to the gross margin front and not exactly the EBITDA margin front.

Gross margin. You meant to say, from quarter-to-quarter?

Yes. Versus Q2, I think it has declined by 70 bps.

[indiscernible] cost, construction cost, you are saying?

Yes. Construction expense and cost of materials combined.

Many of the projects are newly started, right? So they are at the initial level of execution. So that margin might be affected in initial stages. As we already mentioned in last quarter also, we have started many of the new projects. So because of that, that effect can be there on the [indiscernible]. So because of that, that effect can be [indiscernible].

Got it. Got it. Got it. Okay. And I think on the order flow front, I think if I see Q2 versus Q3, I think we have seen that institutional and government order book has actually declined. So can you just help us understand the trends in that 2 front, how is it looking, let's say, now versus September?

As far as order inflow is concerned, now being a partner with Adani Group. We are having plenty of inquiries from their side. And we would like to maintain our presence in the market by thinking about 15% to 20% and non-Adani and 75% to 80% from Adani group. And that's how -- we are not also bidding for the smaller projects of the government side. And the project which we have bidded of INR 967 crores of this Ambaji corridor. It was one of the largest and prestigious project of Gujarat where we have already [indiscernible] and we are waiting for that order. So order inflow in terms of government or the non-Adani will be on selection basis because as far as the group is concerned, we are having plenty of work to do.

Okay. Okay. And currently, what is the split of Adani and non-Adani order book?

40%.

Okay. So basically, this 40% should go down to 20%, and then because of which you are seeing some -- okay. got it.

The next question comes from the line of Vishal Periwal from PL Capital.

I think one question is on inflow. You did mention in the PPT, order inflow of almost like INR 5,000-odd crores. But if we look at the order book, which we generally give on a quarterly basis, so it looks like the inflow is, I mean, like some different number. So there is certain cancellation of orders are also there. So is that fair to understand?

So basically, see, once certain orders are -- certain projects are over, we have to foreclose certain amount because even during this quarter also, we have closed certain orders. So order value -- remaining order value, we need to short closed. So because of that and also in during -- within existing orders, there are certain orders where we have short closed certain amount. That amount has been reduced. So that amount can be the differentiator.

Okay. Okay. Okay. Because I think that number comes to almost like INR 3,700-odd crores and the report...

No, It cannot be that much. It's around this year only, INR 100 crores to INR 150 crores.

Sure, sure, ma'am. And second, I think in terms of the inflow that we get from the group, I mean, Adani Group. So what is the nature of the project? Is it largely a real estate? Because the reason I'm asking is we have seen residential pie has increased in the segmental order book as well as the institutional one, which wherein like generally, we do work of, say, educational institutes or I mean hospitals. So just thought to check.

No. As far as Adani Group is concerned, I think we have a less order book from realty. Most of the projects are institutional or their own CapEx, whether it's residential colony for their Mundra Plant, whether it is a residential colony for the Dharavi Project. There are a few projects related to airports and there are a few projects related to their own institutional requirement at Ahmedabad, but not much on realty side.

The next question comes from the line of Bajrang from Sunidhi Securities.

Sir, congratulations for both growth and execution side. So my question pertains to Dharavi side. If you could guide what is the development because in the recent BMC elections we have seen all the 5 blocks have been won by non-BJP candidates from Uddhav camp and the Shinde, the other NCP camps. So how do you see that whether this will put some sort of delay mechanisms or some sort of chaos there for the development part? How do you see this development in terms of Dharavi project? And also some insights on the Commonwealth Games side, how is the progress, when the tenders are expected and how this thing is going to go through?

First of all, this is the news, which I'm hearing from you that there was -- the participant has won the election. So anyway, it is actually not my job who is going to rule as corporators or how it is going to impact on us. But till now, there is no impact, and we should not worry about that impact also because it is, at the end of the day, group level's call. We are just a part of construction. And as far as construction is going on, we are almost at the finishing of excavation and probably maybe 1 or 1.5 months we'll start the foundation.

Okay. So sir, in terms of new order intakes on the Dharavi side, any broader guidance or the guideline that you can give, how much that probably we are expecting in the near to medium-term time frame?

We are in the discussion of one more project of Dharavi which is on the Matunga block, which will be in the range of INR 2,000 crores.

Okay. In the near term?

Yes. Mostly it should close before March.

Okay. And sir, what about Commonwealth Games that tendering and the expectation?

Commonwealth, that will be announced and I think what we are hearing from the news, the same thing which you hear and we hear is the same. But probably what we are knowing much as far as the tenders, et cetera, there are a few tenders which are going to come for both stadium, which is yet to announce. So we are waiting for those tenders to come, but technically within the INR 7,000 crores to INR 8,000 crores. But that will not be one that is maybe gets distributed into 2 or 3. So we are still waiting how the tender starts and will be given.

Okay. So this will go into FY '27? Nothing is expected till March, right?

No, no, no. I don't think it should be completed within this 3 months. So it should be from the government that they should be in a position to close it before March, to announce the tenders, but probably for contacting from like us, [indiscernible] it can be in next year.

The next question comes from the line of Prajwal from Equirus Capital.

Just wanted to have one clarification. The subsidiary that we have, the PSP Projects and Proactive subsidiary, are we doing any projects over there because there has been a jump in the revenues in the consolidated number as compared to the stand-alone number, which used to be similar. So how we should look at that particular subsidiary? And what kind of work and orders that subsidiary is doing?

See, there are 1 or 2 reasons that we have made that subsidiary a little light because we are getting few orders of MEP, which is going to be a part of new construction. So we take some of the orders of MEP in that part. Also some of the projects are slated into labor and material. So there also we have taken as supplier materials with some profit and the orders are splitted into 2 as services and material. So that is usually required by some of the clients where they're going to the end the project. So they usually ask for 2 parts of ordering system wherein 1 is material and service and 1 is material...

The next question comes from the line of Balasubramanian from Arihant Capital.