Stock to buy: Anand Rathi recommends Vijay Kedia-backed Patel Engineering as its pick for the month

Stocks to buy: Domestic brokerage firm Anand Rathi has recommended Vijay Kedia-backed construction engineering company Patel Engineering as its pick of the month and remains bullish on the stock.

Patel Engineering share price rallied over 3% to hit an intraday high of ₹59.74 apiece on the BSE on Friday. The infrastructure and construction services company Patel Engineering is a multibagger stock that has given more than 177% returns in the past one year and over 367% returns in three years.

On the technical front, Patel Engineering shares have recently undergone a notable decline and is currently trading near the ₹58 mark, closely tracking its 200-day Exponential Moving Average (DEMA).

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“Additionally, the daily stochastic indicator is inside the oversold zone, indicating a potentially favorable opportunity for investors. In light of these developments, we recommend traders and investors to contemplate entering long positions within the ₹56-58 range,” Anand Rathi said.

The brokerage firm’s suggested Patel Engineering share price target for this trade is ₹66, aiming to capture potential gains from the expected upward movement. The target price implies an upside of more than 14% from Thursday’s closing price.

“To mitigate risks, we advise setting a stop-loss at ₹52.5, based on daily closing prices, ensuring prudent risk management throughout the trade,”Anand Rathi Research Team said.

Vijay Kedia trims stake

Ace investor Vijay Kedia holds 1.42% stake in Patel Engineering as of quarter ended March 31, 2024, as per the latest shareholding pattern of the company. Kedia’s stake in the company has dropped down from 1.68% in the December quarter.

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Patel Engineering Financials

Patel Engineering reported revenue from operations of ₹1,052 crore in the December quarter, registering a growth of 13.23% YoY. The company’s net profit in Q3FY24 jumped to ₹43 crore, marking a significant surge of 100% from ₹21 crore in the corresponding period last year.

The company said it is prioritising the reduction of the Debt/EBITDA to enhance profitability, leveraging its large land bank and other non-core assets for debt reduction.

Its order book at the end of Q3FY4 exceeded ₹19,000 crore (including L1 orders).

At 12:55 pm, Patel Engineering shares were trading 2.18% higher at ₹59.05 apiece on the BSE.

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Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.