Shares of a civil construction company in ace investor Vijay Kedia’s portfolio gained 5% to hit an upper circuit on the bourses after the company bagged an order worth ₹ 1818.56 crores from NHPC Ltd. At 11:54 AM, its shares were locked at ₹ 57.00 apiece on the National Stock Exchange (NSE).
Patel Engineering and its JV (joint venture) partner have received a letter of award for the Dibang Multipurpose Project for the construction of civil works (Lot-4) from NHPC. The total value of the contract is ₹ 3,637.12 crores and Patel Engineering has a 50% stake in the JV.
The project involves the construction of headrace tunnels including intake, pressure shafts, penstocks, powerhouse & transformer cavern, tailrace tunnels, pothead yard, adits and so on for Dibang Multipurpose Project 2880 MW(12 x 240 MW).
Patel Engineering is more than 7 decades old and is a construction company specialising in the hydropower generation and irrigation segments. It is engaged in the construction of dams, bridges, tunnels, roads, piling works, industrial structures and other kinds of heavy civil engineering works.
As per the latest shareholding pattern, Vijay Kedia through his company Kedia Securities Pvt. Ltd. holds 1.3 crore shares or a 1.68% stake in the company.
With a market capitalization of ₹ 3,999 crores, Patel Engineering is a small-cap company. It has a low return on equity of 6.96% and an ideal debt-to-equity ratio of 0.61. Its shares were trading at a price-to-earnings ratio (P/E) of 25.95, which is higher than the industry P/E of 7.35, indicating that the stock might be overvalued as compared to its peers.
In the past six months, the company’s share price increased from ₹ 13.60 to 57.00, delivering multibagger returns of 319.12%. Therefore, if an investor had invested ₹ 1 lakh in the company’s shares six months ago, the value of their holdings would have been ₹ 4.19 lakhs today!
Written by Simran Bafna
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