Patel Engineering Stock Set For 54% Upside, Says IDBI Capital As It Initiates Coverage With 'Buy'

Patel Engineering has reported positive operating cash flow in the last four years and its working capital days is 100 with large part coming from sticky arbitration claims and land. .NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..IDBI Capital Report.A strong order book, with visibility at four times the trailing twelve months revenue, anticipated inflows from the Hydro segment, and strategic diversification across geographical and sectorial lines, are set to drive the company's topline growth. The company's robust construction capabilities, backed by extensive experience in executing highly technical and advanced projects, are expected to play a pivotal role in its growth trajectory. Operating margins are expected to remain stable, supported by a significant portion of the order book in the Hydro segment. Additionally, a low debt-to-equity (debt/equity) ratio and improving return ratios reflect the company’s strong financial position. At current market price, the stock is trading at valuations of 16x FY25E PE, 13.5x FY26E PE, and 11.5x FY27E PE. We have employed the sum-of-the-parts valuation methodology, assigning a PE of 12 times FY27E for the core construction business, resulting in a valuation of Rs 63 per share. Additionally, we have valued the land assets at Rs 3 per share, other investments at Rs 3 per share, and recoveries from arbitration claims at Rs 14 per share. Combined, the investments contribute Rs 20 per share, which, after applying a 65% valuation factor, translates to Rs 14 per share. In total, this yields a target price of Rs 76 per share, offering a potential upside of 53%. Based on these valuations, we initiate coverage on the stock with a Buy rating..Click on the attachment to read the full report:.Top Stock Pick For 2025 - 'Buy' Kaynes Technology For An Upside Of 31% Says Motilal Oswal; Here's Why.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Patel Engineering Stock Set For 54% Upside, Says IDBI Capital As It Initiates Coverage With 'Buy'

Patel Engineering is one the major beneficiary of Infra capex for hydro plant and it expect bidding opportunity of 30GW+ in sector, says the brokerage.

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Patel Engineering Stock Set For 54% Upside, Says IDBI Capital As It Initiates Coverage With 'Buy'

Patel Engineering is one the major beneficiary of Infra capex for hydro plant and it expect bidding opportunity of 30GW+ in sector, says the brokerage.

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