We recommended Patels Airtemp at Rs. 125-130 on 09.Sep.2014. Here is the first report on Patel’s Airtemp. We remain positive on the company’s future and advice Buy / Hold at current market price of Rs. 164.

The company recently came out with its quarterly results. Here is a short update on the same.



1. Order Book and Capacity: The current order book of the company stands at Rs. 135 crores and the management is quite confident of good orders flow in future due to large capex by private and PSU refiners. To support the future order inflow, Patels Airtemp has enough capacity to execute revenues of up to Rs. 200 crores without any expansion.

2. Strong Visibility:

• High execution of orders in 2nd Half of Financial Year: Based on the current order book, the revenues are expected to increase drastically in the second half of FY15. We expect the company to achieve Rs. 61 crores of sales in 2HFY15, as against Rs. 39 crores of sales in 1HFY15, leading to total sales of Rs. 100 crores in FY15.
• Future Order Book Traction: Based on the traction in exports market, feedback from the Indian refiners, oil upstream companies, and other customers, the management thinks that order inflow will remain strong. This can help the company’s sales to grow at a higher trajectory over next 2-3 years.
   

3. Profitability: If Patel Airtemp clocks in revenue of Rs. 100 crores for FY15, Patel Airtemp should easily be able to give a profit of Rs. 7-8 crore. This would mean an EPS of Rs. 15.


We recommended Patels Airtemp first at Rs. 130 (market cap of Rs. 66 crores). At current market price of Rs. 162 (market cap of Rs. 82 crores), we continue to remain bullish in Patels Airtemp and recommend investors to ADD / HOLD at current levels.

 

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