The Electricity demand in India is expected to grow by 5% per year as per IEA. The growth can be maintained with investments in renewable energy and coal production space. The focus on energy transition and infrastructure development positions India as a key player in the global energy market. This company is entering into the Mining business with significant orders received in this segment. The company has received MDO from Coal India and SAIL which can improve the company’s business. In this article, we will look at some of the plans of the company, financials, and their business segments.
Price Movement
Power Mech Projects Limited’s stock in Friday’s session closed at Rs. 2,755 per share up by 0.40 percent from the previous closing price of Rs. 2,743.90. The stock has delivered a return of around 31 percent in the past year and has outperformed the Nifty Index in the same period.
Business Segments
As per the recent September 2024 results, the company recognizes its revenue from operations from construction and maintenance activities.
As of Q2FY25, the revenue mix from activities like Civil Works contributed around 38 percent, operations and maintenance by around 37 percent, Erection works contributed around 22 percent, Electrical by 1 percent, MDO by 1 percent, and others by around 1 percent.
The order backlog as of September 2024 stood at Rs. 58,067 crore. Out of this Mining orders are around 68.30 percent, Electrical is 10.90 percent, O&M is 5.70 percent, Civil and other works is 13.50 percent and Electrical works is 1.60 percent as of September 2024 quarter.
Future Outlook
The company has given a guidance of 30 percent growth to reach Rs. 5,500 crore which is for the current year which includes Mine developer and operator (MDO) operations. Power Mech can achieve higher profit after tax margins after they achieve peak cumulative peak rated capacity of Coal India Mine and SAIL Mine to 12 percent or 13 percent at the end of FY27 and in the middle of FY28. Power Mech also plans to gain an order inflow of around Rs. 12,000 crore for this current year. They also expect to touch revenues of Rs. 2,100 crores from MDO at peak capacity in FY28 from both mines.
Financial Performance
Their Q2FY25 results show revenue from operations of Rs. 1,035 crore which increased by 11 percent year on year, from Rs. 932 crore in Q2FY24 and a 2.78 percent increase from Rs. 1,007 crore in Q1FY25. Their net profit increased by 37.25 percent year on year, from Rs. 51 crores in Q2FY24 to Rs. 70 crores in Q2FY25. Quarterly, the profits were down by 13 percent from Rs. 70 crore.
The debt-to-equity ratio was 0.28 times declined from 0.43 times in FY23. The RoE in FY24 stood at 15.96 percent improved from 17.88 percent a year ago. However, the RoCE stood at 21.46 percent which has improved from 20.13 percent in FY23.
Shareholding Pattern
As of October 2024, the shareholding pattern includes promoters holding a share of 58.29 percent stake in Power Mech Projects, Foreign Institutional Investors (FII) holding around 4.94 percent, Domestic Institutional investors (DII) standing at 23.11 percent, and public holdings standing at 13.67 percent.
About the company
Power Mech Projects Limited was founded in 1999 by S. Kishore Babu. It is a leading infrastructure and construction company based in Hyderabad. They specialize in providing services for power generation projects which include erection, testing, maintenance, and renovation of plants. With a market presence across South Asia, the Middle East, and Africa, Power Mech has diversified into sectors like water projects, railways, and coal mining. The company aims to improve operational efficiency and profitability and manage a robust order book to support its growth trajectory.
Written by Santhosh S
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