In a mere span of six months, Patel Engineering shares have gained over 340%, riding on the back of robust order acquisitions. The shares, which were trading at a price of ₹13.60 apiece six months ago, have skyrocketed 344% to trade at the present level of ₹60.40.
Starting in March, the shares have consistently yielded double-digit returns every month. Among these, August marked the highest monthly gain, with an impressive return of almost 39%. At current levels, the stock is trading close to its 5-year high of ₹64.80.
Patel Engineering Limited, founded in 1949 and headquartered in Mumbai, is a prominent player in the civil engineering construction segment. The company engages in the construction of highways, bridges, tunnels, dams, airports, and other infrastructure projects. The company's portfolio boasts the completion of 87 dams, 3,000 kilometers of tunnels, and 1,200 kilometers of roads.
On August 28, Patel Engineering, along with the JV partner, received a letter of award for the Dibang Multipurpose Project for the construction of civil works for Lot-4 from NHPC Limited. The company being a 50% partner in the JV, its share in the project is ₹1,818.56 crore.
Last week, the company, in a joint venture, secured the position of the lowest bidder (L1) for an urban infrastructure development project worth ₹1,275.30 crore from Madhya Pradesh Jal Nigam. The company's share in this contract stands at Rs. 446.36 crore.
In addition to strong order wins, the stock's upward rally has also been fueled by the acquisition of a stake by ace investor Vijay Kedia. In Q4 FY23, Vijay Kedia purchased a fresh stake of 1.29% in the company through his brokerage firm, Kedia Securities Private Ltd.
Following Kedia's name appearing in the shareholding pattern, the shares jumped 37% in April, marking the largest monthly gain since December 2021. Furthermore, during Q1FY24, Kedia Securities increased its stake in the company by an additional 0.39%, bringing its overall stake to 1.68%, Trendlyne data showed.
For the June quarter, the company reported healthy performance, with its revenue from operations growing 24.14% YoY to ₹1,119 crore. It reported an operating profit of ₹171 crore as compared to ₹134 crore in Q1 FY23.
During the quarter, the company's finance cost was reduced to ₹87 crore from ₹107 crore in Q4FY23. This reduction was attributed to the replacement of a high-cost client advance on a project, amounting to 252 crore, with a borrowing from a financial institution, leading to significant interest cost savings.
The company's consolidated net profit for the quarter reached ₹38 crore, marking a growth of 22.52% from the ₹31 crore reported in the corresponding period of the previous year.
As of June 30, 2023, the company informed that its total order book reached ₹20,014.2 crore (including L1). In terms of segment-wise distribution, the hydroelectric segment held the largest share at 61.17%, followed by irrigation at 21.28%.
Regarding the client-wise distribution of the order book, the company received significant orders from central government PSUs and state government departments, collectively accounting for 96% of the share.
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