KRC - Weekly Presentation on Patel Engineering

PATEL ENGINEERING

Company Profile
Patel Engineering is an established construction company in India that operates in three business segments, namely, hydro power, irrigation, and roads and urban infrastructure. PEL has built 78 dams, 40 hydro power plants and completed 175 km of tunneling over the past 60 years.

Shareholding Pattern:
Promoter: 45.50 %
FII: 14.57 %
DII: 10.28 %
Others: 29.65 %

Source: BSE data, KRC

Valuations:
CMP: Rs. 335 Tgt Price: Rs. 485 (Upside Potential of 45%)

Source: KRC

Management Profile:
Mr. Rupen Patel: Managing Director
Ms. Sonal Patel: COO & Board Member
Mr. Pravin Patel: Chairman

Other Key Data:
Equity Value – Rs 6.9 crore
Face Value – Rs 1.00
Market Cap- Rs 2,316 crore
Free Float – Rs 1,128 crore (50%)

Industry Outlook
Construction Opportunity

Source: Planning Commission, Construction Industry Development Council (CIDC), KRC

Business Model:
1) Leader in the high margin segments like hydropower, tunnelling, and dam construction.
2) Pioneer in using Roller Compacted Concrete (RCC) technology in India.
3) Involved in two power projects, thermal power plant in Tamil Nadu and a hydro power plant in West Kameng Arunachal Pradesh.
4) Involved in water storage & distribution in international markets such as US, Australia, Sri Lanka, Nepal, etcetera through their US subsidiary.
5) Current order book stands at Rs 105 billion (including Rs 2,100 crore of L1 status).
6) Order book translates into revenue visibility for next 3.5 years.
7) Land bank of about 1,100 acres across India and ~60 acres in Mauritius with a book value of Rs. 300 crore.
8) Holds minority stake in two BOT annuity projects in Karnataka & AP.

Source: Company, KRC


Core Business...Revenue Visibility
• PEL is a leader in the high margin segments like hydropower, tunneling, and dam construction and a pioneer in using Roller Compacted Concrete (RCC) technology in India where cement is replaced with fly ash in the construction of dams resulting in faster execution of projects and cost savings.
• Its current order book stands at Rs 105 billion (including Rs 2,100 crore of L1 status) and translates into revenue visibility for next 3.5 years.
• 18% of order book exposed to Andhra Pradesh


Valuations – Upside with limited downside


Relative Valuations


Income Statement (Consolidated)


Balance Sheet (Consolidated)


Disclosures :
The presentation has been prepared by the KRC PMS team. It must be borne in mind that this stock is a part of the PMS’s model portfolio. Hence, the presenters are directly / indirectly interested in the stock doing well.

Thanks,
Gaurav Agarwal
Head Dealer
DENIP Consultants Pvt Ltd