Smallcap Shares to Buy: Analysts recommend Patel Engineering for long-term with nearly 50% upside

Smallcap Stock to Buy: Analysts at domestic brokerage Ventura Securities have initiated coverage on Patel Engineering with a ‘buy’ stance. 

According to the brokerage, the company has technical expertise and mainly undertakes complex infrastructure projects under the EPC model (Engineering, Procurement, and Construction). It has focus on government and PPP-based infrastructure projects, which are typically long-term in nature but offer strong revenue realization.

What are orders and growth potential?

As of December 31, 2024, the smallcap company has an order book of Rs 16,396 crore, including 64 per cent from hydroelectric projects and 21 per cent from irrigation works, the brokerage said. While 63 per cent of the orders come from central PSUs, and 34 per cent are from state government departments.

According to the analysts, this provides 3.5 times visibility on the company’s trailing twelve-month (TTM) revenue.

Here are some order highlights of the company:

• Rs 67,000: Allocated for Jal Jeevan Mission for FY26
• Rs 8,259: For Pradhan Mantri Krishi Sinchai Yojana
• Hydro Projects: 15,000 MW in Arunachal Pradesh, 6,000 MW in Himachal and Jammu & Kashmir.
• Investigations are underway for 60,000 MW pumped storage projects.

Moreover, the company is handling 45 per cent of India’s under-construction hydro projects and has contributed to 25 per cent of the total operational hydro capacity in the country.

Patel Engineering’s financial overview

As of December 31, 2024, its debt-to-equity ratio (D/E) has reduced to 0.38x, with total debt declining to Rs 1,422 crore from Rs 1,965 crore a year ago. This marks a sharp improvement from FY17, when the company’s debt stood at Rs 5,400 crore. The company’s credit profile upgraded to A- (Stable) from B+ in FY21.

Patel Engineering Share Price Target

Analysts at Ventura Securities have suggested buying the smallcap stock with a target price of Rs 63 for the next 24 months, implying a potential upside of 48.34 per cent. The stock touched a 52-week high of Rs 74.40 and a 52-week low of Rs 35.68.

What does Patel Engineering do?

Patel Engineering, an infrastructure and construction firm, has emerged as a strong contender in the engineering and construction space, particularly in hydroelectric power projects, tunnels, dams, bridges, and irrigation systems. With over 70 years of industry experience, the company has completed more than 87 dams and over 15,000 MW worth of hydro projects.