PATELS AIRTEMP (INDIA) LTD - REPEAT

 

Quality of promoter is very important while selecting stocks for long term hold.Possibility of frauds and fabricated results are very high when the mood in the street is bullish with higher retail participation.Generally , in a bull market , promoters tend to show good results in few quarters to boost share price either for their own exit or to raise fund at higher price .So ,selecting a stock during bull phase need extreme care and we should look beyond the published results and frequent announcements. Considering all these factors ,re-looking into a company which I recommended earlier and still believe there is lot of steam left in long term.

                                   Patels Airtemp (PAT)  is an Ahmedabad based company manufacturing Heat exchangers,Pressure Vessels,Refrigeration and Air Conditioning equipments.Their products are mainly used in industries like Chemical, Power,Refinery,Cement,Fertilizer and Petro Chemicals..etc.For the past many years lot of projects from these sectors were stuck due to various reasons like environment clearance ..etc which is expected to move on in near future. Strict pollution control norms implementing in developed countries helping Indian chemicals manufactures to boost their export by adding additional capacities here.India is expected to grow as a global hub of chemicals and pharmaceuticals in the years to come. Stable price of crude and crude derivatives will help the growth of petrochemical industry . All such developments will indirectly help companies like Patels Airtemp to grow business. Last year company  entered into a long term supply arrangements with a leading global manufacturer of heat exchangers for supply of this product with stringent quality standards.

                                    Revival in user industries and effect of foreign supply agreement is already started to reflect in its order book position. As on 31 March 2014 , company have confirmed orders worth Rs.136 Cr ( Rs.40 Cr order book in previous year) which is highest ever in its history . This order book giving comfortable visibility for next few years. Aggressive purchasing of shares by promoters from open market is another factor which  increasing the confidence level .For the past one years promoters are hiking their stake through open market purchases and same is still continuing  even @ Rs.129 .( Check purchase disclosures   HERE and HERE) .Last year company paid back its entire long term debt and there is no long term borrowings in its books as on 31 March 2014.We know , the past 2-3 years were very difficult for any company operating in capital goods sector . But company paid back all its long term loans and secured the highest ever order book during this period, which is very important point to note. I believe ,company is at the tip of an inflection point and the future will be far better than the past . Since I have already posted about this company just six months back , not explaining further.

                                             Company reported a top-line of Rs.70 Cr , net profit of Rs.4.67 Cr and an EPS of Rs. 9.20 in last FY .PAT is an uninterrupted dividend payer for the past seven years and paid 20 % in FY 2013-14. This is one of my preferred stocks from this sector which is currently trading around Rs.123 and listed only in BSE.

Link to Company Website HERE 

Disc: Holding PAT.