Mehabe score: 3 G Factor: 3 Piotski Score: 5 The stock has a rating OBSERVE & HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 3 and Piotski score of 5.
Description
Patel Engineering is engaged in business of Engineering, Procurement and Construction EPC segment.Site:PATELENG
Market Cap:
Rs 724 cr
Price:
15.6
Trading pe:
x
Book-value:
52.7/share
Div yield:
0.00 %
Earning yield:
5.26%
Face-value:
1.00/share
52week high:
17.57
52week low:
9.15
Technical Analysis
Stock trades at 15.6, above its 50dma 14.05. It also trades above its 200dma 13.51. The stock remains bullish on techicals
The 52 week high is at 17.57 and the 52week low is at 9.15
Price Chart
P/E Chart
Sales and Margin
Strengths
– Stock is trading at 0.29 times its book value
Weakness
– Though the company is reporting repeated profits, it is not paying out dividend
– has low interest coverage ratio.
-Promoter holding has decreased over last quarter: -4.63%
-The company has delivered a poor sales growth of -5.18% over past five years.
– has a low return on equity of 4.69% for last 3 years.
-Promoters have pledged 88.09% of their holding.
-Earnings include an other income of Rs.125.92 Cr.
Competition
– The industry trades at a mean P/E of 17.0x. Macrotech Devel. trades at the industry’s max P/E of 18.89x. PATELENG trades at a P/E of x
– Industry’s mean G-Factor is 4.8 while the mean Piotski score is 6.0. PATELENG has a G-Factor of 3 and Piotski scoreof 5.
– Average 1 month return for industry is 15.4%. The max 1- month return was given by JP Associates: a return of 55.56 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 734.0 cr compared to Rs 550.0 cr for period ended Mar 2020, a rise of 33.5%
Company reported operating profit of Rs 78.0 cr for period ended Mar 2021, operating profit margin at 10.6 %.
Operating profit was negative for the same period last year thus company has improved its margins this year
The EPS for Mar 2021 was Rs -3.03 compared to Rs -0.85 for previous quarter ended Dec 2020 and Rs -1.96 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 1995.0 cr for period ended Mar 2021 vis-vis sales of Rs 2617.0 cr for the period ended Mar 2020, a fall of 31.2%. The 3 year sales cagr stood at -4.3%.
Operating margins expanded to 12.0% for period ended Mar 2021 vis-vis 7.0% for period ended Mar 2020, expansion of 500.0 bps.
Net Profit reported at Rs -291.0 cr for period ended Mar 2021 vis-vis sales of Rs 11.0 cr for the period ended Mar 2020, falling 0%.
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has worsened on its Return on Equity (RoE) metric. The RoE on Last Year basis was 1.0% compared to 5.0% over the last 3 Years. – The stock has given a return of 12% on a 1 Year basis vis-vis a return of -27% over the last 3 Years. – The compounded sales growth on a TTM bassis is -32% vis-vis a compounded sales growth of -12% over the last 3 Years. – The compounded profit growth on a TTM basis is -578% vis-vis a compounded profit growth of 29% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Mar 2021 fii holding stood at 0.0% vis-vis 0.14% for Dec 2020 – Public shareholding has remained largely constant. The Mar 2021 public holding stood at 16.63% vis-vis 17.09% for Dec 2020
Conclusion
– Stock is trading at 0.29 times its book value – Though the company is reporting repeated profits, it is not paying out dividend
– has low interest coverage ratio.
-Promoter holding has decreased over last quarter: -4.63%
-The company has delivered a poor sales growth of -5.18% over past five years.
– has a low return on equity of 4.69% for last 3 years.
-Promoters have pledged 88.09% of their holding.
-Earnings include an other income of Rs.125.92 Cr.
Fundamentally, the stock remains weak on business fundamentals. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock trades above its 50 DMA 14.05 and is trading at 15.6 It has shown near term bullish momentum contrary to business fundamentals. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
