Patels Airtemp India Ltd: A Multibagger Stock in Making

Patels Airtemp India Ltd. was incorporated on august 28, 1992 and is promoted by shri Narayanbhai G. Patel & associates who have been in the business of design and fabrication of process equipment and engineering goods.

The company is one of the leading manufacturers of high quality engineering products. The Company is engaged in the manufacturing equipments like ASME 'U' Stamp Vessels & Heat Exchangers, Pressure Vessels, Columns Shell & Heat Exchanger, Finned Tube Heat Exchanger, Air Cooled Heat Exchanger Ventilation Units, Exhaust Air Units, Refrigeration & HVAC Equipments, HVAC Systems and Ventilation & Air Washer Plants which are supplied to leading Refineries, Steel, Copper, Aluminium & Automobile Plant, Fertilizers & Chemicals Plants, Textiles and Paper Industries, Refrigeration & Air Conditioning Units etc.

Patels Airtemp has recently received prestigious orders worth of Rs. 16.3 crore from Indian Oil Corporation (IOCL) for supply of Heat Exchangers for Paradip Refinery Project, Orissa. Last month, the company received order worth of 5 crore from Manav Nesvi Infrastructure Pvt., Ahmedabad for Air Conditioning of Shree Balaji Agora Mall, Ahmedabad. The company keeps on getting orders from its regular reputed customers also.

Patels Airtemp' net profit surged 20% to Rs 2.11 crore on 14.4% increase in net sales to Rs 15.36 crore in Q3 December 2009 over Q3 December 2008. The current price of Rs 99.00 discounts the company's Q3 December 2009 annualized EPS of Rs 16.64, by a PE multiple of just 5.95.

Return On Capital Employed (ROCE) is around 42% and Return On Net Worth (RONW) around 32% for last two continuous years. Given its low debt-equity ratio of 0.28, a high dividend yield of 1.85%, and high ROCE & RONW, the valuation appears to be extremely attractive. The stock is a safe bet for getting steady returns in long run.

There is regular promoter buying & the performance is improving every year. With huge Government spending into Oil and Gas sector, Fertilizer sector, Capital Goods and Infrastructure sector and recent Government foray into Nuclear Power sector, there is immense scope of the Growth of the Company and the Long Term Prospect looks very good for the Company. The stock appears to be A Multibagger in Making.

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