Patel Engineering Ltd: CMP INR 69 & MCap INR 530 crore
Business Overview:
Patel Engineering Ltd undertakes civil construction and engineering projects. The Company participates in building dams, tunnels, etc., both in India and abroad.
The overall management commentary is positive related investment activities in the country
Key highlights of management meet
1.) The current standalone order backlog of company is INR 9,000 crore comprises Power (40%), Irrigation (38%) and Urban Infra (22%). Parinitia Irrigation project (INR 1000 crore) in Telangana is slow moving and expected to be replaced with new order by new Government.
2.) The company target INR 3,000 crore of order inflow comprises of Hydro power projects (50%) and Irrigation & urban Infra (50%). The company is already pre qualified for INR 15,000 crore hydro power projects.
3.) The US based subsidiaries (EPC Companies) are expected to deliver stable topline (INR 900 crore) and profitability (PAT 3%).
4.) The company has won INR 2,500 crore (out of INR 5,000 crore) in arbitration and expected to receive 75% of this amount in next 6-8 months. Management is confident to win rest amount in arbitration too considering the terrain (full rock) of hydro power projects. The company works with Government clients like NHPC, NTPC, NEEPCO etc.
5.) The amount (INR 1,875 crore) received via arbitration results and proceed (INR 800 crore) from divestment of real estate will be used to reduce the current debt (INR 4,500 crore).
6.) The company has planned to fully divest BOT assets like Gongri HE project (Equity Invested INR 71 crore) and Thermal Power Plant project (Equity Invested INR 209 crore).
7.) Patel, minority stake (42%) in Two BOT assets, with KNR has signed an agreement to divest full stake to Essel Group at an Enterprise value of INR 850 crore. Patel has invested an equity of INR 33.6 crore (42% Stake, valued at 1.15x equity).