Is Patel Engineering Limited's (NSE:PATELENG) CEO Overpaid Relative To Its Peers?

Simply Wall St

The CEO of Patel Engineering Limited (NSE:PATELENG) is Rupen Patel. First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

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Check out our latest analysis for Patel Engineering

How Does Rupen Patel's Compensation Compare With Similar Sized Companies?

Our data indicates that Patel Engineering Limited is worth ₹3.8b, and total annual CEO compensation is ₹29m. (This figure is for the year to March 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at ₹24m. We took a group of companies with market capitalizations below ₹14b, and calculated the median CEO total compensation to be ₹1.3m.

It would therefore appear that Patel Engineering Limited pays Rupen Patel more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

You can see, below, how CEO compensation at Patel Engineering has changed over time.

NSEI:PATELENG CEO Compensation, May 15th 2019

Is Patel Engineering Limited Growing?

On average over the last three years, Patel Engineering Limited has grown earnings per share (EPS) by 95% each year (using a line of best fit). Its revenue is up 3.9% over last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. It's nice to see a little revenue growth, as this is consistent with healthy business conditions. Although we don't have analyst forecasts, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Patel Engineering Limited Been A Good Investment?

Given the total loss of 54% over three years, many shareholders in Patel Engineering Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

We compared total CEO remuneration at Patel Engineering Limited with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.

However, the earnings per share growth over three years is certainly impressive. However, the returns to investors are far less impressive, over the same period. Considering the per share profit growth, but keeping in mind the weak returns, we'd need more time to form a view on CEO compensation. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Patel Engineering.

Important note: Patel Engineering may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.