A fundamentally strong infrastructure company involved in constructing dams, bridges, tunnels, roads, and heavy civil works across hydro, irrigation, urban infrastructure, and transport sectors. With an order book exceeding its market cap, it reflects robust prospects, potential undervaluation, and appeal for long-term investors.
Price Movement
In Tuesday’s trading session, Patel Engineering Ltd‘s share price reached an intra-day high of Rs.42.59 per share, rising 3 percent from its previous close of Rs.41.24 per share. However, the stock has declined since then, trading at Rs.41.56 each. Over the past five years, the stock has delivered over 300 percent returns.
What happened
As of December 31st, 2024, our order book stands at Rs.16,396 crores, more than 450 percent of our market capitalization of Rs.3,565 crores. Hydropower accounts for 64 percent, irrigation for 21 percent, tunneling for 10 percent, with the remainder coming from other sectors.
Although project awarding activity was subdued in the first three quarters, we expect a strong influx of large-scale projects this calendar year, providing significant opportunities. We are on track for a 10 percent growth this year and anticipate a similar growth rate of 10-12 percent in the next year.
Regarding bidding activity, we have bid for projects worth over Rs. 30,000 crores, currently under evaluation, with additional projects worth Rs. 30,000-40,000 crores expected to be available for bidding soon. With these new order inflows, we foresee a surge in revenue growth from FY27, following a 6-9 month mobilization period.
Capacity Enhancement
Patel Engineering has commenced the final concreting of the powerhouse for the Subansiri Hydroelectric Project, which has a capacity of 2,000 MW. The Subansiri Lower Hydroelectric Project is expected to generate approximately 7,500 million kilowatt-hours of power annually in a 90 percent dependable year.
Patel Engineering’s share in the total power generation installed capacity includes 47 percent from coal, 33 percent from other renewables, 11 percent from hydro, 7 percent from others, and 2 percent from nuclear.
Financial Performance
Turning towards the financials of the company, Patel Engineering Ltd reported Q3 FY25 revenue of Rs.1,206 crore, rising 14 percent from Rs.1,061 crore in Q3 FY24. Moreover, net profits of the company increased by 19 percent to Rs.82 crore, from Rs.69 crore in the same period.
Important Financial Ratios
The Return on Capital Employed (ROCE) of the company stands at 11.32 percent, while the Return on Equity (ROE) is 7.38 percent.
The company’s Price-to-Earnings (P/E) ratio is 9.93, which is lower than the industry average of 19.94. Additionally, the company maintains a good current ratio of 2.22 and a low debt-to-equity ratio of 0.4.
Company Profile
Patel Engineering Ltd, established in 1949 and headquartered in Mumbai, India, is a prominent civil construction company specializing in infrastructure projects including dams, hydroelectric plants, transportation networks, and real estate development. The company utilizes advanced construction techniques and maintains a strong presence in both domestic and international markets.
Written by – Siddesh S Raskar
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