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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.