HDFC Sec positive on PEL follow-on issueAtul Sathe / Mumbai May 03, 2006HDFC Securities, in its FPO note on Patel Engineering (PEL), states that the company, providing quality and timely engineering construction services, has now attained a global presence. It provides consultancy and contract management services apart from undertaking concept to commission projects. It stands well positioned in this industry.The positives include timely execution of projects, cost efficiency and core professional expertise. It generally executes projects in this segment directly but sub-contract its routine, less complex work to other contractors.PEL provides good visibility for future revenues with its order book execution period being 36-40 months. It is aggressively bidding for irrigation and road projects and derisking its business model. Having high margin hydropower projects, it consistently delivers high EBITDA margins. Revenues would grow due to new business line.PEL could grow its sales by 38 per cent in FY07 and about 22 per cent in FY08. At the price band of Rs 400
