Patel Engineering - Wait For Value Unlocking

Patel Engineering posts 34.46% jump in cons net profit at Rs 27.04 crore versus Rs 20.11 crore YoY. Consolidated income from operations rose 33.07% at Rs 415.25 crore Vs Rs 312.06 crore. Revenues includes: 50% from Hydro projects, 30% from Irrigation and 8% from road business.

As on June 30, 2007, company’s order book position above Rs 5,000 crore. Company has pre-qualified for new projects worth in excess of Rs 6,000 crore as on June 30, 2007. Company bagged order worth USD 153 million in Algeria from Agence Nationale Des Barrage Et Transferts (ANBT – Algeria).

Floated wholly owned subsidiary Patel Realities India Ltd (PRIL) for real estate development. Company currently owns more than 500 acres of urban land bank in Bangalore, Chennai, Hyderabad, Mumbai and other cities. Real estate revenues starts reflecting from FY09. Working capital is of 150 days current cash at Rs 175 crore including Rs 100 crore from unutilised funds from FPOs Rs 30 crore revenues from Joint Venturs. Debt equity ratio - 0.70, current debt at Rs 500 crore plus.

Patel Engineering - Bags Order From NHAI

Patel Engineering's Order Book Stood At Rs. 5000.00 Crore

National Highways Authority of India (NHAI) has awarded an annuity based build operate-transfer (BOT) project worth Rs518 crore to Patel Engineering Ltd.

The is to be located on NH-7 in Andhra Pradesh under North-South Corridor (NHDP Phase II). Patel Engineering and KNR Constructions will jointly execute the project. The semi-annual annuity project will generate total revenue of Rs1,597.32 crore.

The NHAI project work includes design, construction, development, finance, operation and maintenance of Islam Nagar to Kadtal stretch of the Nagpur-Hyderabad section on NH-7 in Andhra Pradesh under North-South Corridor (NHDP Phase II. The work also includes approximately 32km four-laning of the bypass out of 48km.

Avccording to Rupen Patel, managing director, Patel Engineering, "We would focus on selective road development projects following government's new initiative to encourage private sector participation in the road sector development through BOT (Built Operate and Transfer) annuity projects."

Recognising the present deficiencies in the road network, the government has assigned a high priority to the National Highway Development Programme (NHDP). According to NHAI data, a total of 23,546km of roads would be constructed in the next two year. Further, to encourage participation of the private sector, the department of road transport and highways has laid down comprehensive policy guidelines for private sector participation in the highway sector to encourage private sector participation. It has been decided that all the sub-projects in NHDP Phase-III to Phase-VII would be taken up on the basis of PPP on Build Operate and Transfer (BOT) mode.

As on March 31, 2007, the Company's order book position stood at around Rs 5,000 crore. Around 55 per cent of the orders are from multipurpose water supply and power projects, 25 per cent from irrigation and 20 per cent in transportation and other sectors.

Patel Engineering - May Unlock Value

Patel Engineering May Hive Off Realty Arm

Patel Engineering, the Mumbai-based infrastructure construction firm, is on course to unlock the value of its urban land bank. The company is transferring most of its rights in lands in cities like Hyderabad, Chennai, Bangalore, Mumbai and Pune to a company which will be a 100% subsidiary of Patel Engineering.

The new company, named Patel Realities India Ltd will have a land bank of more than 500 acre of urban real estate in these cities. The new company will also develop these properties.

Sources at Patel Engineering confirmed the development. The idea to hive off its real estate division into a separate company was to enhance shareholders wealth by monetising its urban land bank, sources said. The entire land bank of Patel Engineering is owned by the company it had bought several years ago and is valued at historical prices in its books.

A fund manager, who tracks the company and attended a recent management meet, said Patel Realties plans to develop its urban land areas into commercial and residential real estate. When completed, the total space could aggregate to about 60 million square feet. At a conservative price of about Rs 2,000 per square feet, the total value unlocking could be a staggering Rs 12,000 crore.

Compared to this, Patel Engineering’s current market capitalisation is a little over Rs 2,200 crore. Going forward, on a standalone basis, the real estate subsidiary itself could be as big or even larger than its parent, Patel Engineering.

"The company has already made the initial moves and put in place its key management team," the fund manager said. Recently there was market speculation that the company might hive off its real estates into a separate listed company. However, the company sources said at present there were no plans to list the realty company.

Patel Engineering has already put in place a key management team headed by Pravin Malkani as PRIL’s president. “We are in the process of appointing other key personnel for the company to create adequate infrastructure for the real estate business,” said Mr Patel. Mr Rupen, however, denied any plans to demerge the subsidiary. “Since our entire real estate development is in major metros, we do not see any need to access the capital market. Going forward, we believe that reality business will enhance cash flows, which will then be used for further strengthening our core business and taking more BOT and independent power projects.”

Pravin Malkani, president, PRIL, said, “We will focus on residential and commercial development in these metros. Going forward, we see profits from PRIL competing with the parent company.” The company reported a 51% rise in consolidated net profit at Rs 111 crore for the financial year ended March 31, 2007.

The positive development is already beginning to show on the company’s stock price. In the last one month, the stock has increased 20% and the activity in the stock has increased since the company announced its annual results a week ago. Volume have jumped dramatically in both the NSE and BSE in the last two days.

Patel Engineering is a major player in underground construction of tunnels and caverns and has also acquired expertise in micro-tunnelling. Recently the company, in partnership with another firm, bagged a Rs 157 crore order from the municipal authority in Mumbai for construction of a tunnel in the city.

Recently, the company also announced its foray into thermal power generation. It is planing to set up a 1200 MW power plant in Gujarat with a proposed investment of Rs 5,000 crore.

The company is also foraying into power production as an independent power producer through its subsidiary Patel Energy Ltd.

Hydro-power generation could be the next area where it could step into, the company said in a recent announcement to the Bombay Stock Exchange.

Patel Engg - Gammon India JV Bags Rs 806Cr Order

Patel Engineering’s Order Book Stands At Around Rs 4800 Cr

Patel Engineering Ltd., a civil infrastructure construction company, today announced that the company has bagged order a Rs 806 crore order in joint venture with Gammon India Ltd from the Satluj Jal Vidyut Nigam Ltd for the 434 MW Rampur Hydro Electric Project. Satluj Jal Vidyut Nigam Ltd. Is a joint venture between the Government of India and Government of Himachal Pradesh.

The project is located on the river Satluj in Shimla and Kullu Districts of Himachal Pradesh. The project work involves construction of a 15-km-long head race tunnel (HRT), a 140-m deep surge shaft and power house on the right bank of river Satluj near Village Bael in district Kullu. The project will be completed in the next 54 months.

Commenting on the development, Sonal Patel, Whole Time Director, Patel Engineering said, “The hydro power sector is witnessing significant traction as the hydro power capacity addition during Tenth Five Plan (FY03-FY07) is expected at 8,762MW. Further, Ministry of Power has set a target of capacity addition of 20,000MW during the Eleventh Plan (FY08-12).”

“Given the fact that a large number of hydro power projects are being awarded and with construction component accounting for 70 per cent of the cost of a hydro power project, we believe that this segment offers good growth potential,” Sonal Patel added. Interestingly, Patel Engineering has participated in 22 per cent of India’s 32,000 MW hydroelectric projects.

Patel Engineering’s order book position stands at around Rs 4800 crore, which includes Michigan Engineers order book of Rs 50 crore in urban infrastructure. Of this Rs 4800 crore, 50% of the orders are from hydro division, 28% irrigation and 22% in transportation and other sectors.

Source : Moneycontrol.com

Patel Engineering - Huge Land Bank

Expect 25% Growth In Topline:- Patel Engg

Patel Engineering did an FPO in the first quarter of this financial year. Rupen Patel, MD of the company speaks about its business fundamentals. According to Rupen Patel, the current land bank stands at 500 acres and the order book is at Rs 5000 crore. Patel expects 25% growth in the topline. He also expects margins to improve, going forward.

Excerpts of CNBC-TV18's exclusive interview with Rupen Patel:

Q: You have got quite a land bank that you are sitting on at this point and plan to develop it as well. Could you tell us a little bit about that?

A: Right now, the land bank exists in various metros, primarily Bombay, Hyderabad, Bangalore and Chennai. We are planning to now encash or monetize the value of this land bank. The board is looking at various options as to how to monetize it.

Q: How much of it would you sell and how much of it would you seek to develop? Could you give us some of the details of the development plans and break it up into what kind of sq ft, it may actually generate for you saleable?

A: It will be a little premature for me to give you the size of how much we will sell and how much we will develop. The board is looking at various options; not of selling as such, but on debt of developing the entire land bank. It is under consideration right now and we should come up with the details very shortly.

Q: Can you give us a rough idea of what the current market value of the land bank would be?

A: The size of the land bank will probably be an excess of 500 acres held in the balancesheet at historical values. The market value of the land bank, about five years ago, was about Rs 250 crore.

Q: So where would you valuate that at today’s market price then?

A: It would be difficult to evaluate at today’s market price because we have not evaluated today’s market price because it is in a different stage. But I am sure that it is substantially high.

Q: Have you worked out any rough idea of this 500 acre, how much do you want to develop and what sort of development plans do you have?

A: The development plans would primarily be into commercial and residential spaces in some areas and in some areas, it will be in joint venture with other estate developers. But we have not worked out our exact figure. It is probably premature for me to give out the figure before the board finally discuss it and let it out.

Q: Whatever the board decides, by when do you see work progressing on this?

A: In about a month’s time, in which I think we should come out with the concrete numbers.

Q: For any of these development plans, will they all be routed through the listed entity of Patel Engineering or will you float a new subsidiary? What is the game plan as you see it?

A: Right now, the game plan is that the lands have been held up by Patel Engineering. So everything will be done in Patel Engineering itself. In the separate subsidiaries, right now, we do not intend to float a separate subsidy for this.

Q: As regards to your core business, how is the orderbook shaping up there and how much of it do you see executing by the end of FY08 fiscal?

A: The orderbook right now is close to about Rs 5000 crore, of which 50% is in the hydro sector, 35% in the irrigation sector and 15% would translate into miscellaneous and the transportation sector. In terms of the execution period, on an average, it is about four-five years.

So what you will see based on this orderbook, minimum growth of 25% in topline as guarantee. Even the company does not take any more work, which is highly unlikely. So you will atleast see YoY of about minimum 25%.

-Moneycontrol

Patel Engineering - More Orders

Patel Engineering Bags Rs 360 Cr NTPC Project.

Patel Engineering Ltd today said it has bagged Rs 360 crore orders from National Thermal Power Corporation (NTPC) for construction of Loharinag Hydel power project penstock and powerhouse in Uttaranchal. In a communique on the Bombay Stock Exchange, Patel Engineering said the order comprised construction of a 600-Mw Loharinag Pala Hydro Electric Power Project penstock and powerhouse on river Bhagirathi in Uttarkashi district of Uttaranchal.

“Hydro power has always been the prime focus of the company. The company will capitalise on its vast experience and expertise in this sector,” said Patel Engineering director Sonal Patel. The company, which had earlier bagged the Head Race Tunnel package of the same run-of-the-river scheme project, added that the latest order will achieve closure in the next 45 months.

Patel Engineering recently acquired a controlling stake in Michigan Engineers Pvt Ltd (MEPL), an urban infrastructure company, for an undisclosed sum and was awarded the Loharinag Palo Hydro Electric Power Project head race tunnel package worth Rs 318 crore.

Patel Engineering - Low Equity High Growth

Patel Engineering Q2 Net Profit Up 100% To Rs 25.48 Cr

Patel Engineering Ltd., a civil-infrastructure construction company, reported a 103.23 per cent jump in consolidate net profit at Rs 25.48 crore for the second quarter ended September 30, 2006 as compared to Rs 12.54 crore in the corresponding quarter previous year. Consolidated revenues for the quarter rose 32.37 per cent at Rs 243.76 crore as against Rs 184.16 crore during the same period previous year.

The company has posted a 87.32 percent rise in net profit to Rs 45.59 crore for the six months period ended September 30, 2006 compared to Rs 24.34 crore in the corresponding period previous year. Net Income from operation increased by 30.99 percent to Rs 555.83 crore compared to Rs 424.32 crore during the same period previous year.

The company has also witnessed an improvement in margins, with net profit margins improving to 8.20 per cent as against 5.74 per cent during the same period in the previous year. The earning per share (basic and diluted of face value of Re 1) for the quarter stood at Rs 8.01 as on September 30, 2006 compared to Rs 5.01 in the corresponding quarter last year. “With government’s emphasis on infrastructure gaining momentum we continue on a high growth trajectory. We have witnessed significant improvement in our order-book positions and are in the process of bidding for several upcoming development projects”, said Ms. Sonal Patel, Director - COO, Patel Engineering Limited.

She further added, “Patel Engineering, as part of its growth strategy, is moving towards annuity-based projects in road construction and looking at opportunities in hydropower sector as an independent power producer (IPP). Also, with the acquisition of Michigan, technology-led focus is on urban infrastructure projects in metros as well as tier II cities. The company recently acquired a controlling stake in Michigan Engineers Pvt Ltd (MEPL), a Mumbai based urban infrastructure company, for an undisclosed sum. Also, the company was awarded the two projects by Rail Vikas Nigam Ltd, New Delhi worth Rs 176 crore.