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 Thursday’s trading session, Patel Engineering Ltd’s share price reached an intra-day high of Rs.53.10 per share, rising from its previous close of Rs.52.42 per share. However, the stock has declined since then, trading at Rs.52.73 each. Over the past five years, the stock has delivered over 300 percent returns.
What happened
Patel Engineering, a fundamentally strong infrastructure company, holds an impressive order book of Rs.17,260.7 crore, significantly exceeding its market cap of Rs.4,496 crore.
Patel Engineering has recently secured key projects, including the Teesta-V Power Station in Sikkim, valued at Rs.240.02 crore from NHPC Ltd, involving a tunnel spillway, environmental flow dyke, and gate operation chamber.
Additionally, it won the Jigaon Water Lifting Project in Maharashtra, worth Rs.317.6 crore from the Government of Maharashtra, covering approach channel construction, rising mains installation, pumping machinery setup, and switchyard establishment.
Order Book Segmentation
Patel Engineering’s order book comprises 50 projects valued at Rs.17,260.7 crore. The hydroelectric segment includes 15 projects, contributing 63.5 percent (Rs.10,951.7 crore), followed by 19 irrigation projects at 21.2 percent (Rs.3,661.2 crore). Tunnel projects make up 10.5 percent (Rs.1,804.6 crore) across six projects, while road and other projects account for 1.8 percent (Rs.307.5 crore) and 3.1 percent (Rs.537.5 crore), respectively.
Patel Engineering’s order book of Rs.17,260.7 crore spans 50 projects. Central Government and PSUs account for 17 projects worth 62.5 percent (Rs.10,783.8 crore), while State Government departments contribute 31 projects at 34.5 percent (Rs.5,949.6 crore). Additionally, two international projects make up 3 percent (Rs.527.3 crore).
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.
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Financial Performance
Turning towards the financials of the company, Godavari Biorefineries Ltd reported Q2 FY25 revenue of Rs.1,174 crore, rising 15 percent from Rs.1,021 crore in Q2 FY24. Moreover, net profits of the company increased significantly by 92 percent to Rs.73 crore, from Rs.38 crore in the same period.
Important Financial Ratios
The Return on Capital Employed (ROCE) of the company stands at 13.9 percent, while the Return on Equity (ROE) is 7.50 percent.
The company’s Price-to-Earnings (P/E) ratio is 17.33, which is lower than the industry average of 19.94. Additionally, the company maintains a solid 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
Disclaimer
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