The share price of a construction company appreciated to the tune of 4 percent on Wednesday’s trades to reach an intraday high of ₹ 4,187.90 apiece on the National Stock Exchange (NSE). This happened after the company bagged orders worth ₹ 625.21 crores. Its shares settled at ₹ 4,110.10 apiece.
Power Mech Projects is an engineering and construction company providing integrated service in erection, testing and commissioning (ETC) of boilers, turbines and generators and balance of plant (BOP), civil works and operation and maintenance (O&M). It undertakes ultra mega power projects, super critical thermal power projects and sub-critical power projects.
According to an exchange filing, the company received an order for the operation and maintenance of 2x 91.2 MW including the control room operation of CPP (Captive Power Plant) at Dariba, Udaipur, Rajasthan worth ₹ 229.20 from Hindustan Zinc Limited. This contract is to be executed over a period of six years.
It added that it has received another order for the erection, testing and commissioning assistance of boiler, turbine, generator for its project site for 2×600 MW Power Plant at Village Singhitarai, Chattisgarh (erstwhile known as Athena Chhattisgarh Power Limited) (ACPL) from Vedanta Limited for ₹ 396.01 Crores. This order is to be executed within eighteen months.
In the past year, the company’s share price increased from ₹ 1376.80 to ₹ 4110.10, delivering multibagger returns of 198.53 percent. Therefore, if an investor had invested ₹ 1 lakh in the company’s shares a year earlier, the value of their holdings would have been ₹ 2.98 lakhs today!
With a market capitalization of ₹ 6,036crores, Power Mech Projects is a small-cap company. It has an ideal return on equity of 19.16 percent and an ideal debt-to-equity ratio of 0.37. Its shares were trading at a price-to-earnings ratio (P/E) of 27.36, which is lower than the industry P/E of 32.52, indicating that the stock might be undervalued as compared to its peers.
The company’s promoters hold a 64.12 percent stake in it followed by retail investors with 20.34 percent, mutual funds with 11.96 percent and foreign institutions with 3.58 percent.
Written by Simran Bafna
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