Company Report | Q4FY11 Result Update

LONG TERM INVESTMENT CALL

17 May 2011 Hold

Industry Constructions Q4FY11 Result Highlights

CMP (INR) 148
Target Price 135 Patel Engineering Ltd. topline for Q4FY11 came ahead of Unicon’s and
52 week High/Low (INR) 446 / 132 street expectations. However, profit after tax plunged by over 50% on
Market Cap (INR Mn) 10,586
YoY.
3M Avg. Daily Vol. (‘000) 1,480
P/E (FY13e) 6.4
Consolidated Revenue at INR 16bn increased by 33% YoY. However the
Shareholding Pattern (%) operating profit at INR 1.3bn was down by 13.9%. The fall in operating
profit was attributable to lower share of revenue from its Hydro Power
Promoters
segment and higher construction cost. The construction and other cost
Non 45%
Institutions
increased by 48.2% on YoY to INR 13.8bn for the quarter under review.
37% The operating profit margin was down to 8.14%, -447bps. Interest cost
Institutions surged by 58% to INR 728Mn. This led to sharp fall of ~50% in its profit
18% after tax and minority interest.

Consolidated revenue for FY11 grew 9% on YoY to INR 35bn. The

Stock Performance operating profit at INR 4.7bn fell by 7% on YoY with lower operating
650 PEL NSE Nifty
600
profit margin of 13.5% compared to 15.9% during FY10. Net profit (after
550
500
Minority Interest) for FY11 decreased by 35.2% to INR 1.3bn.
450
400
350 Order-Book lacks revenue visibility
300
250
200
150
The current order-book of the company stands at ~INR 92bn (including
100
L-1 projects worth INR 1.8bn). The management states that the company
May

Jun

Sep

Jan
Jul

Oct

Mar

Apr
Dec
Aug

Nov

Feb

gained new orders worth INR 1.6bn during the quarter under review.
Performance (%) Adjusted for slow and non-moving orders, order-book stands ~ INR 60-
70bn. The current order-book provides poor visibility of revenue for its
3 core business, but management guides for sound order-intake on the
1 Month 1 Year
Months
back of internal orders worth INR 25bn from its power business.
Company -11.8% 12.3% -64.4%
NIFTY -4.0% 0.9% 8.7%
* Source: Capitaline
Outlook & Valuation
(INR in Mn)
Particulars Actual Estimates At the CMP stock trades at price to earning multiple of ~6.4x its
Total Income 15,965 9,996
consolidated earning of FY13. There is clear lack of visibility of revenue
EBIDTA 1,299 1,669
Reported PAT 360 280 from its current order-book and we do not expect sizeable new order-
* Source: AceEquity, Unicon Research intake in short to medium term. Further, higher construction and interest
cost would continue to keep pressure on its profit margin. Hold for price
target of 135 (5.5x its FY13e).

Wealth Research, Unicon Financial Intermediaries. Pvt Ltd.

Email: wealthresearch@uniconindia.in
 Financials (INR in mn)
Q4FY11 Q4FY10 YoY FY11 FY10 YoY
Net Sales 15,965 11,971 33.4 34,993 31,909 9.7
Total Expenditure 14,666 10,461 40.2 30,267 26,823 12.8
Construction and Other Costs 13,786 9,301 48.2 27,466 24,084 14.0
General & Admin Exp. 880 1,161 -24.2 2,801 2,738 2.3
EBITDA 1,299 1,510 -13.9 4,726 5,087 -7.1
EBITDA (%) 8.1 12.6 -447 bps 13.5 15.9 -244 bps
Depreciation 160 296 -45.8 865 1,090 -20.7
EBIT 1,139 1,214 -6.2 3,861 3,997 -3.4
EBIT (%) 7.1 10.1 -301 bps 11.0 12.5 -149 bps
Interest 728 461 58.0 2,215 1,577 40.5
Other Income 158 371 -57.4 307 630 -51.3
PBT 570 1,125 -49.4 1,953 3,050 -36.0
PBT(%) 3.57 9.40 -583 bps 5.6 9.6 -398 bps
Tax 133 374 -64.5 544 929 -41.4
PAT 437 751 -41.8 1,409 2,121 -33.6
PAT (%) 2.7 6.3 -354 bps 4.0 6.6 -262 bps
Minority Interest 77 32 125 139
Net Profit after tax and MI 360 719 -50.0 1,284 1,982 -35.2

Source: Company, Unicon Research *Consolidated

Wealth Research, Unicon Financial Intermediaries. Pvt Ltd.

Email: wealthresearch@uniconindia.in
 Unicon Investment Ranking Methodology

Rating Buy Accumulate Hold Reduce Sell

Return Range >= 20% 10% to 20% -10% to 10% -10% to -20% <= -20%

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Wealth Research, Unicon Financial Intermediaries. Pvt Ltd.

Email: wealthresearch@uniconindia.in