Synopsis: A brokerage has started coverage on Power Mech Projects, highlighting its diversified business, strong execution, healthy order pipeline and long-term growth prospects, supported by India’s expanding infrastructure and power investments.
The shares of this small cap company majorly engaged in engineering and construction company providing integrated service in erection, testing and commissioning (ETC) of boilers, turbines, generators and many more were in after the brokerage sees 45 percent upside potential.
With the market capitalization of Rs. 8250 Crores, the shares of Power Mech Projects Ltd were trading at around Rs. 2609 per share which is 23 percent discount from its 52 week high of Rs. 3415 per share and is trading at a P/E 22.7 whereas industry P/E stands at 16.9
Brokerage View
Centrum Broking has initiated coverage on Power Mech Projects with a ‘Buy’ rating and a target price of ₹3780, implying an upside potential of around 45%. The brokerage believes the company is well placed to benefit from India’s long-term investment cycle in power and infrastructure, backed by its strong execution track record, diversified operations and growing presence across multiple business segments.
Diversified Business Strengthens Growth
Power Mech Projects has gradually moved beyond being a thermal power EPC contractor and now operates across engineering, procurement and construction (EPC), operation and maintenance (O&M), civil infrastructure and Mine Development & Operations (Mine Developer and Operator ).
This wider business mix is reducing its dependence on a single segment while improving earnings quality through higher-margin and recurring businesses. Between FY22 and FY26, the company reported a 22.3% revenue CAGR, while EBITDA, PBT and PAT grew at 25.3%, 31.6% and 27%, respectively. Better project selection, disciplined cost control and operating leverage have supported margin improvement during this period.
Large Order Book Provides Long-Term Visibility
As of March 31, 2026, the company had an order book of ₹551.5 billion, nearly 9.1 times its FY26 revenue of ₹60.6 billion, giving strong visibility for future execution. The order book is spread across power, industrial projects, railways, roads, mining and O&M, reducing dependence on any single sector.
The Mine Developer and Operator (MDO) business has emerged as an important growth driver with operational contracts worth over ₹395 billion, while annual revenue from this segment is expected to rise from ₹3.5 billion in FY26 to ₹12.1 billion by FY28.
Healthy Pipeline Supports Future Orders
The brokerage expects order inflows to remain healthy, supported by a bidding pipeline of nearly ₹510 billion. Out of this, around ₹210 billion consists of high-probability opportunities, and assuming a conversion rate of about 50%, expected order inflows could reach ₹120 billion during FY27. The company has already secured fresh contracts in the first quarter across O&M, railway infrastructure and power projects while continuing to bid for opportunities in thermal power, industrial EPC, mining and international O&M services.
Strong Financial Position
Power Mech Projects has strengthened its balance sheet over the last few years through better profitability and improved cash generation. Consolidated net worth increased nearly 2.5 times to ₹25.2 billion in FY26, while operating cash flow improved to ₹4.3 billion. The company also reduced debt during the year, maintaining a comfortable debt-to-equity ratio of around 0.3, giving it financial flexibility to support future expansion.
Industry Tailwinds Remain Strong
The brokerage believes India’s infrastructure spending and power sector investments provide a favourable environment for the company. Government capital expenditure has increased significantly, while investments are expected across thermal power, renewable energy, railways, roads, mining and industrial projects. Rising outsourcing of O&M services, expansion of mining through long-term Mine Developer and Operator contracts and continued spending on infrastructure are expected to create sustained opportunities for Power Mech Projects over the coming years.
Key Risks
The report notes that delays in government funding under the Jal Jeevan Mission (JJM) could affect execution and receivables in the water segment. It also highlights that order inflows can remain uneven due to project cancellations or delays, as seen in FY26 following the cancellation of a ₹15.6 billion battery energy storage project. However, the brokerage believes the company’s diversified business model and large order pipeline help reduce these risks over the longer term.
Conclusion:
Centrum Broking believes Power Mech Projects is well positioned for long-term growth, supported by a diversified business model, a strong order book, healthy financials and expanding opportunities across power, mining and infrastructure. With increasing contributions from recurring revenue businesses and a robust project pipeline, the company is expected to benefit from India’s sustained infrastructure and capital expenditure cycle over the coming years.
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