We recommended Patels Airtemp (PAT) at Rs. 125-130 in Sep2014. Since then, the stock price reached a peak of Rs. 185. On price correction, we re-recommended Patels Airtemp to be bought at Rs. 125 (reports below).

Date	Patel Airtemp Past Reports
09-Sep-14	Patels Airtemp: Strong Orderbook Led Growth
14-Nov-14	Patels Airtemp: Second Half to be better than First Half
11-Jun-15	Patels Airtemp - Creating Stronger Foundation

Patels Airtemp announced its 1QFY16 results. Here is a short summary on the same.

1. Best Ever June Quarter Sales: Although June quarter for the capital goods industry is usually weaker, PAT clocked a healthy sales growth of 65% from Rs. 16 cr in Q1FY15 to Rs. 26.6 cr in Q1FY16. The company started this year with a very healthy order book and we think that the sales should pick up in the coming quarters.



2. Building Long Term Order Pipeline: Patels Airtemp has been focusing on international front and has participated in multiple tenders worldwide. We expect some of these tenders to be converted into orders and will bring long term visibility of sales. Currently, the company has capacity to execute orders worth Rs. 200-250 crores without any major capex.

3. Higher Utilization Should Increase Margins: The company posted EBITDA margins of 11.7% in Q1FY16 as against 14.8% Q1FY15. However, due to the nature of business that leads to customization for each product, margins across quarters are not comparable. Overall, with higher execution in future, margins should see modest increases as operating leverage kicks in. At its peak, Patels Airtemp had EBITDA margins of 20%. Over a longer run, Patels Airtemp has decent scope of improvement in margins.

Valuation: At current market price of Rs. 148-150, PAT is trading at a market cap of Rs. 76 crores. We continue to remain bullish over a long term and would suggest HOLDING the stock.

---

Dhruvesh Sanghvi is a Research Analyst registered with SEBI having registration No: INH000000875.

Definitions of Rating system:

• Fresh Recommendation Reports: These reports are first-time initiation reports on the concerned stock. Usually these reports are followed by updates on the same.
• Update Reports: These reports include result update, event updates, annual report analysis and/or any other information that may be useful for the investor in relation to the concerned stock. Most of these update reports will have our current view on the same.

• Buy: This means buying the concerned stock at current market price.
• Buy on Dips: This means buying the concerned stock on the explained fall in price.
• Hold: This means holding the concerned stock until further update.
• Sell Partial: This means selling half of the existing position in the concerned stock.
• Exit: This means completely exiting the concerned stock.

4. Explanation of Indicative Target Price: Achievement of Target Price does not imply Exit / Sell Partial. We will explicitly release Exit/ Sell Partial Report at an appropriate time. If required, Indicative Target Price could be revised based upon business performance, market environment or any other important event.
DISCLOSURES by RESEARCH ANALYST UNDER SEBI (RESEARCH ANALYSTS) REGULATIONS, 2014 is as under:
• Introduction: Prospero Tree Financial Services is an independent equity research proprietorship firm of Mr Dhruvesh Sanghvi.
• Business Activity: Prospero Tree Financial Services is committed in providing honest views, opinions and recommendations on financial markets opportunities.
• Report Written by: Dhruvesh Sanghvi
• Disciplinary History: None
• Terms & Conditions: https://www.prosperotree.com/termsofuse
• Details of Associates: Not Applicable
• Disclosure with regards to ownership and Material Conflicts of Interest:
1. Neither Dhruvesh Sanghvi, Prospero Tree Financial Services, its associates, its Research analysts hold any position in the subject company.
2. Neither Dhruvesh Sanghvi, Prospero Tree Financial Services, its associates, Research Analysts, nor its relatives, have more than 1% ownership of the subject company at the end of the month immediately preceding the date of publication of this report.
3. Neither Dhruvesh Sanghvi, Prospero Tree Financial Services, its associates, Research Analyst nor its relatives, has any other material conflict of interest at the time of publication of the research report or at the time of public appearance.
• Disclosure with regards to Receipt of Compensation:
1. Neither Dhruvesh Sanghvi, Prospero Tree Financial Services or its associates, or Research Analyst has received any compensation or other benefits from the subject company or the third party in connection with the research report in past twelve months.
2. Neither Dhruvesh Sanghvi, Prospero Tree Financial Services or its associates, or Research Analyst have managed or co-managed public offering or securities for the subject company in past twelve months.
• Other Disclosures:
1. The Research Analyst has not served as an officer, director, or employee of the subject company.
2. The Research Analyst is not engaged in market making activity for the subject company.

Share On