Indiainfoline is recommending a BUY on Patel Engineering Ltd [PEL]. The company enjoys 22% market-share in Hydro Power construction in India. The company has an order book of Rs 5,400 crore. Though majority of the power sector investments in India will be Nuclear fuel based, hydro power will also see some investments and their are only handful of players in the segment.
PEL owns a land bank of 1200 acres in Hyderabad, Mumbai, Bangalore, Chennai and Panvel. It now plans to unlock the value of this land bank through its fully owned subsidiary, PRL. The land bank is valued at Rs 3,000 crore.
PEL is expected to grow at 33.3% CAGR between FY07-09. Adjusted for real estate and one annuity project, the stock trades at a P/E of 9x on FY09 earnings and EV/EBIDTA of 6.3.Indiainfoline recommends a BUY with a target price of Rs 1,017.