Patel Engineering Limited — Investor Meet, 19-11-2024: Analysts/Institutional Investor Meet/Con. Call Updates

**Financial Performance:** Revenue for the quarter grew approximately 15% year-over-year to INR 1,174 cr, with a profit after tax surging over 150% to INR 81 cr from INR 32 cr in the same quarter last year. The operating EBITDA rose by 15.8% to INR 162 cr, resulting in a marginal increase in EBITDA margin to 13.81%. On a half-yearly basis, total revenue reached INR 2,276 cr, with a profit after tax of INR 129 cr, reflecting stable performance despite challenging circumstances.

**Future Outlook and Growth Drivers:** Management expressed optimism for growth, citing an anticipated resurgence in order inflows as the monsoon and election seasons recede. The government’s commitment of INR 11.11 lakh cr towards infrastructure and ongoing initiatives in renewable energy will provide further momentum. The company's focus will remain on hydro projects, irrigation, and road sectors while exploring opportunities in private contracts selectively.

**Order Book and Operational Updates:** The current order book stands at INR 17,260 cr, with 64% attributable to the hydro sector. Recent highlights include winning a contract for a water lifting project worth INR 317.6 cr and securing an L1 position for the Teesta-V hydropower project valued at INR 240 cr. The firm is also expecting major order inflows of around INR 10,000 cr over the next year.

**Analyst Q&A Insights:** Analysts inquired about debt reduction, to which management affirmed a strategic focus on reducing term debt, currently at INR 650 cr. Questions regarding competitive positioning against peer Afcons indicated strong confidence in maintaining project margins (estimated at 14-15%). While discussing working capital, management noted that the high inventory includes a significant land stock component, stabilizing the working capital cycle to approximately 112 days.

**Strategic Focus Areas:** Key strategic themes observed include a commitment to sustainable growth, an emphasis on project execution efficiency, and partnership enhancement through alliances with PSUs. Management aims to maximize its robust pipeline and focus on innovation in infrastructure development.

**Investor Insight:** Financial metrics suggest a growth trajectory supported by strategic alliances and government backing. Considering current performance, future order inflows, and market positioning, Patel Engineering exhibits positive growth potential, indicating a favorable long-term view.