1.
Patel Engineering Ltd - Techno Funda Call
FairWealth Equity Research
TECHNO FUNDA CALL – PATEL ENGINEERING LTD
15th
June 2011
RECO: BUY; CMP: Rs 164; SL: Below Rs 130; Target: Rs 215; Horizon: 12 months
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Absolute Retrun %
Patel Eng. Nifty
Rs Cr FY10 FY11E FY12E FY13E
Net Sales 3190.9 3499.3 3586.8 3766.1
EBIDTA 571.7 503.2 508.6 520.5
Margin% 15.9 13.5 13.3 13.0
PAT 198.2 128.4 116.7 123.4
Margin% 6.2 3.7 3.3 3.3
EPS (Rs) 31.0 18.4 16.7 17.6
INVESTMENT THESIS
PEL’s order book stands at Rs 9500cr, out of which Rs 6500cr is the executable
backlog, of which 40% constitutes from Hydro power, 46% from irrigation related
and 14% from Urban Development projects. The L1 order book of the company
stood at Rs 3300cr comprising of Rs 1500cr AP Irrigation project, Rs 1500cr Kotli
BHEL Hydroelectric project and Rs 300 Tanzania project. The order intake during
the Q4FY11 remains subdued at Rs 160cr and Rs 1200cr during FY11, however the
executable order at Rs 6500cr (1.9x of its FY11E net sales) provides stable earning
visibility for FY12E.
Real estate division for the first time has contributed to the topline in Q4FY11. The
contribution from the division was Rs 440cr of which Rs 330cr is contributed by its
Noida project while the rest comes from Smondoville Bangalore project. PEL sold
its ‘Patel Corporate Park’, during the quarter, which is located near its corporate
office, with a built up area of 80,000sqft for a consideration of Rs76cr. The
company has recently launched its 120acres luxury township “Townsville” at
Neotown. It is expected that the company to book Rs 545cr during FY12 from real
state.
Valuations: We believe that the contribution from non-core business especially
from real estate division to increase, also the performance of traditional business to
remain subdued on the back of muted order intake. PEL is expected to report EPS
of Rs 16.7 and Rs 17.6 in FY12E and FY13E resp. We recommend “BUY” on PEL
with the target of RS 215 which is 12.9x and 12.2x of its FY12E and FY13E
earnings.
Bloomberg Code PEC IN
Market Cap (Rs bn) 11.4
Face Value (Rs) 1
Book Value (Rs) 213.41
EPS TTM (Rs) 18.4
Dividend Yield 1.26%
52 week H/L (Rs) 446/131.1
Daily Avg. Vol (lakh) 4.3
Listed At NSE/BSE
Equity capital (Rs cr) 6.98
PARTICULARS (Rs
cr)
Q4FY11 Q4FY10 VAR % Q3FY11
Revenue
1596.5 1234.2 29.4 441.7
EBITDA
145.8 188.1 -22.5 115.1
PAT
43.7 75.1 -41.8 7.7
OPM %
9.1 15.2 611bps 26.1
NPM %
2.7 6.1 335bps 1.7
EPS (Rs)
5.2 10.3 -50.0 1.3
Patel Engineering Limited (PEL) wet its feet in the industry during the year 1949. PEL is a
dynamic and progressive Indian Engineering company committed to providing the entire range
of civil engineering services involved in the design, construction of Power Houses,
Hydroelectric Projects, Commercial Building, Industrial Complexes, Dams, Tunnels,
Underground Structures, Steel and Concrete Structures, Bridges, Marine Works, Flyovers and
National Highways in India and abroad.
Contact Us:
FairWealth Equity Research Desk
E mail: fairwealthequityresearch@fairwealth.in
Phone No: +91 1243024807
Technical Outlook
Patel Engineering is currently hovering in the consolidated zone i.e. Rs. 130-198.
There is no evidence of reversal in the chart till the time it makes the higher top or
higher bottom. Also there is no specific candle suggesting the reversal. However, If
an investor wants to make a bottom fishing, below Rs 130 is strict stop loss and for
the short term traders, stop loss is below Rs 150.

2. Patel Engineering Ltd - Techno Funda Call
Institutional Desk
Name Designation Email ID
Lokeshh Gowda Senior Manager lokeshh.g@fairwealth.in
Archana Bhui Trader archana.bhui@fairwealth.in
Rajan Bhatia Dealer rajan.bhatia@faairwealth.in
Stock Ratings
BUY The stock's total return is expected to exceed 15% over the next 12 months
ACCUMULATE The stock's total return is expected to be within 10-15% over the next 12 months
REDUCE The stock's total return is expected to be within 0-10% over the next 12 months
SELL The stock's total return is expected to give negative returns over the next 12 months
NOT RATED The Analyst has no recommendation on the stock under review
Fundamental Research Team
Name Designation Email ID
Sharmila Joshi Head-Equity sharmila.joshi@fairwealth.in
Prakash Pandey AVP- Research & PMS prakash.pandey@fairwealth.in
Preeti Gupta Sr. Research Analyst preeti.gupta@fairwealth.in
Varun Khanna Research Analyst varun.khanna@fairwealth.in
Suvarna Binjola Research Analyst suvarna.binjola@fairwealth.in
Tanisha Jolly Research Analyst tanisha.jolly@fairwealth.in
Shakti Rajpal Research Analyst shakti.rajpal@fairwealth.in
Ankit Manuja Research Analyst ankit.manuja@fairwealth.in
Nidhi Pahwa Research Associate nidhi.pahwa@fairwealth.in
Technical Research Team
K.K. Madaan Head-Technical kamal.madan@fairwealth.in
Hunny Tarika Sr. Technical Analyst hunny.tarika@fairwealth.in
Pervez Danish Sr. Technical Analyst pervez.danish@fairwealth.in

3. Patel Engineering Ltd - Techno Funda Call
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