'Stock price is reflection of our growth': Patel Engg CMD

Rupen Patel, Chairman and Managing Director (CMD) of Patel Engineering, on Friday said that the company saw the highest-ever recorded turnover in its history last year.

In an interview with Siddharth Zarabi, Managing Editor of Business Today Television, Patel shared details about the company's financial performance and future growth prospects.

Patel Engineering is a prominent infrastructure company specialising in hydropower, irrigation, and other construction projects.

Patel said that during the previous financial year, Patel Engineering achieved a turnover of Rs 4,200 crore, marking a significant increase of 24 per cent compared to the previous year. The company's EBITDA also grew by approximately 14-15 per cent, and the net profit soared from Rs 55 crore in 2022 to Rs 150 crore in the financial year 2023. This remarkable financial performance demonstrates Patel Engineering's strong position in the infrastructure sector, he said.

Patel Engineering is known for its expertise in various construction sectors, including hydropower, irrigation, roads, buildings, dams, and tunnels. The company has undertaken prestigious projects that have garnered international recognition, such as the tunnel in Aircon, the Subansiri Hydro Electric Project, and the highest wind road tunnel in the world at the Sala Cross Project. These achievements highlight Patel Engineering's capabilities in managing complex engineering challenges and executing projects in challenging geographies.

According to Patel, the company's order book currently stands at over Rs 20,000 crore, including L1 orders where Patel Engineering has been declared the lowest bidder in government tenders. Looking ahead, Patel Engineering aims to further expand its order book to approximately Rs 25,000 crore by the next financial year, representing a significant growth of 40 per cent. The company anticipates that its future earnings will be primarily driven by hydropower and irrigation projects, which offer higher margins and align with the government's focus on these sectors.

To strengthen its financial position, Patel Engineering has successfully reduced its debt profile from Rs 5,300 crore to around Rs 1,700 crore, said Patel. This achievement was accomplished through the sale of non-core assets and settling arbitration awards.

Patel added that the company plans to continue reducing its debt by approximately Rs 200 crore this year through further arbitration settlements. As a result of these efforts, Patel Engineering's share price has witnessed a doubling in value over the past six months.

“The share price has moved based on our performance. It has moved in the last six months. It has almost doubled and I see that being a reflection of the performance of the company,” said Patel in the interview.

With substantial government spending in infrastructure projects, Patel believes that the sector is poised for robust growth. The company expects new players, including foreign companies, to enter the market and support the execution of large-scale projects. Patel Engineering remains open to tie-ups and joint ventures with foreign companies to share financial risks and leverage their technology and expertise.

“The company is at the edge of a well prepared recipe. The government spending is huge. I have not seen this amount of government spending in certain areas in the last 35 years because I've been in the sector for the last 35 years,” said Patel

The Indian government's initiatives to streamline project execution have significantly reduced delays and disputes in the infrastructure sector. Patel Engineering emphasises self-sufficiency within its projects to manage cash flows and reduce dependency on banking finance. Additionally, the introduction of surety bonds as an alternative to bank guarantees by the government has further improved the financial situation for companies in the sector.

Overall, Patel Engineering is well-positioned to capitalise on the government's infrastructure plans, backed by a strong order book, reduced debt, and a strategic focus on high-margin sectors such as hydropower and irrigation projects. The company's track record and expertise make it a key player in the sector, driving its future growth and contributing to the development of India's infrastructure landscape.

Watch the Full Interview -