Power Mech stock rises 4% after bagging ₹294 crore order from Adani Power

Shares of Power Mech Projects gained almost 4 per cent on January 1, 2025, after the company bagged ₹294 crore order from Adani Power. Power Mech Projects share price was hovering around ₹2,668.85 at 12:40 pm on Wednesday, against the previous close at ₹2,570, on the National Stock Exchange (NSE).

According to data available on NSE, a total of 62,000 shares have already been traded, surpassing the one-month daily average of 53,000 shares.

The domestic order includes delivering overhauling services, conducting condition assessments, managing erection, testing, and commissioning, as well as providing manpower support for the Performance Guarantee Test of the Steam Generator (SG), Steam Turbine Generator (STG), and their associated auxiliaries.

The order for the Unit 3 steam generator and steam turbine generator must be fulfilled within 12 months, while the Unit 4 order needs to be completed within 18 months, the company informed via exchange filing.

In November, Power Mech secured a ₹510 crore order from Adani Power for mechanical construction work on its thermal power project in Chhattisgarh. The project is scheduled to be completed within 34 months.

Last week, the company secured a contract valued at ₹186 crore from Jaiprakash Power Ventures to deliver field operation and maintenance services for the 2 x 660 MW Jaypee Nigrie Super Thermal Power Plant in Madhya Pradesh over the next five years.

Should you buy or sell?

Brokerage firm Geojit gave a ‘buy’ rating to Power Mech Projects stock following September quarter earnings, with a target price of ₹3,330, suggesting an upside potential of up to 25 per cent from current levels.

“We value the stock at 15X PE on FY27E EPS, to arrive at a target of ₹3,330, thereby upgrading our recommendation to BUY,” the brokerage firm said in a report.

In the second quarter of FY25, the company recorded a 35.6% increase in its consolidated net profit, reaching ₹69.51 crore compared to ₹51.26 crore in the corresponding quarter of the previous year.

Meanwhile, the consolidated revenues grew 11 per cent year-on-year (YoY) to ₹1,035 crore, aided by strong execution in the erection segment. EBITDA grew 9 per cent YoY to ₹124 crore, however, margins saw a 21bps decline to 11.9 per cent.

“We forecast execution to scale up in the second half of FY25 as we move past election-induced slack. Additionally, contributions from MDO business can help POWM unlock 23% CAGR revenue growth in the FY24-27E period. We build in EBITDA margin expansion of 252bps in this period enabled by contributions from profitable segments like O&M and Mining (after it reaches peak rated capacity—EBITDA/PAT margins are expected to be in the range of 22%/13%). The earnings are expected to grow at 41.3% and for ROE to improve significantly to 20.3% in FY27E,” the brokerage added.

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