Patels Airtemp (India) Ltd - Conservative Promoters, Potential Business.

We are witnessing huge buying in almost every sector thanks to NaMo. A new era has just begun not only to India but also to Indian stock markets also. We are very hopeful that NaMo government will deliver on promises made. 

Every sector has seen rise in prices in anticipation of reforms. Stocks have doubled investors money in a month and even then there are no signs of any meaningful corrections. This is a typical feature found in strong bull markets. We also know every 8 years in the past there has been bull markets and now we are expecting one in 2016. As said earlier we are hopeful that NaMo will deliver, which if takes more time than markets expectations then we might see some corrections. May be this is the rare time to see retail investors waiting for a correction to enter !!

It was very hard for us to pick a stock and recommend our readers to buy. We were looking at a less risk stock. 

There were no logic as even the dud stocks have doubled . Markets are truly a crazy place. This is the time for investors to remain calm before investing and not simply put money in any company. Short term you might make money if you are lucky, however long term always wins.

This month's stock Patels Airtemp(PAT) , comes from a capital goods and engineering sector.PAT stands proudly as one of the leading manufacturers of high quality engineering products. The company has two manufacturing units - both equipped with stat-of-the-art production facilities. Expansion facilitated PAT to concentrate on a much wider range of products that include

• Heat Exchanger (Shell and Tube Type - Finned Tube Type)
• Air Cooled Heat Exchangers.
• Columns and Pressure Vessels.
• Refrigeration and Air Conditioning equipment.
• HVAC Projects.

PAT is engaged in the manufacturing of 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 & HVACE equipments, HVAC Systems and Ventilation & Air Washer Plants which are supplied to leading Refineries, Steel, Copper, Aluminum & Automobile Plant, Fertilizers & Chemicals Plants, Textiles and Paper Industries, Refrigeration & Air Conditioning Units, etc. 

Quality Promoters

Promoters are best in the industry they operate with most of them are having 20 years of experience having expertise in air conditioning, refrigerator,Heat exchangers,Pressure Vessels etc ... 

Under their leadership company providing superior products through top notch technical expertise and innovations. PAT has and will grow to be a force to reckon within the engineering fabrication sector. We should agree that it is engineering excellence beyond compare. It is difficult to put everything in a nutshell. One should search for more data and understand them if not convinced.

Dividend Payout

Even in tough times when India Inc. was struggling with all sorts of problem, PAT has payed consistent dividends at 20%. This is in spite of decrease in bottom line significantly in the last 5 years. Here we should appreciate the promoters for sharing their profits even when it was less.

Promoter Holding

Last 2-3 years has seen promoter holding increasing from 37% to 45%. 

Last year alone an increase of 5%, signifies that good days are ahead.

Debt

Debt levels are low at less than 15 crores even when the sector was not doing any good. In fact the management is one of the best and should be appreciated. Proper use of the capital has also given good ratios like ROC and ROCE. The best in the industry.

Interest and finance costs have fallen drastically from 2.7 crores FY 12-13 to 1.2 crores in last year. This is another proof for promoters quality.

The latest notice from company shows it has closed all long term borrowings !!

PAT - Clients

Well if one visits the companies website, the client list simply goes on and on. 

See here: http://www.patelairtemp.com/client.htm

Range bound for years.

This was the period when promoters were busy buying !!

And we are now seeing a breakout from the range. Good times haven't fully come as we see it.

High book value

With book value close to 100 and P/B around 0.72 , its very hard to ignore. This is with very good return ratios !!

Conclusion

When most of the stocks have run up more than 100%, PAT has nicely consolidated on its initial gains from 55/- levels. This brings in confidence to us and we think the next leg of uptrend might be sharper. However its also less risk as supports are stronger and are built upon with more than 2 years. In case we see a correction investors should only accumulate as PAT will be hugely benefited with reforms in oil & gas, power and refinery sectors which is most likely to happen sooner or later.

The stock has not come to the eyes of  FII and big investors , hence not participated fully in the current rally. We feel that the CMP @ ~ 70 might be the base and future might prove to be one of the best in PAT's history.

Safe Investing.