Rajesh Power Services, the annual report came out yesterday and is worth your time.
₹1,628 cr revenue (+52%),
₹138 cr profit
Order book ₹3,742 cr.
Trading at 10x. Looks obvious to buy.
Then I opened the cash flow statement.
The good:
→ Order book 2.3x revenue. Real visibility
→ Structural T&D cycle - RDSS, undergrounding, GIS, BESS
→ CRISIL upgraded to A- with Positive outlook
→ 43% ROE, 12% EBITDA margins held while scaling 52%
→ Promoters hold 72.7%. Serious skin in the game
→ Entered Odisha, won ₹865 cr of orders in Q1 alone
The concerns:
→ 3 years: ₹251 cr profit reported, ₹84 cr cash burned
→ FY26 operating cash flow: minus ₹41 cr
→ Every ₹100 of new sales ties up ₹34 of working capital. Returns ₹9 of profit
→ Two customers = 56% of revenue. Both state utilities
→ Suppliers are funding the growth. MSME dues went ₹5 cr → ₹87 cr
The key number nobody talks about: this business self-funds at ~20% growth. It grew 52%. That gap is exactly why cash went negative. Not a bad business. Just one where growing faster makes the cash problem worse, not better.
My fair valuation says ~₹760. It trades at ₹782.
So I'm waiting for H1 FY27.
Three things I want to see:
1. Operating cash flow turns positive
2. Retention money growing slower than revenue
3. MSME payables normalising
Two out of three and I'm a buyer at ₹850+ too. If not, I can see it going below ₹700.
Profit is an opinion. Cash is a fact.
Not investment advice. Do your own work.
#Nifty #Stockmarket
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