Downgrades

ICICI Securities Ltd | Retail Equity Research Engineers India (EIL) reported decent Q2FY18 numbers. The company reported topline and EBITDA in line with our estimates. However, PAT...

We reiterate BUY with a revised TP of Rs 174/sh (25x FY19E core EPS + cash). Engineers Indias (ENGR) 1QFY18 revenues came in line with our estimates at Rs 3.8bn. Revenue growth was driven by the PMC segment (+21%), while the LSTK segment declined 30% on the back of slower execution. With no major provision write backs, PMC/LSTK EBIT margins stood at 28.0/7.6%. Overall EBITDA margins stood at 21.8% (+40bps YoY). Wage hike provisions increased to Rs 380mn (vs ~Rs 200mn provided in 4QFY17). Consequently, APAT stood at Rs 814mn. The order book stood robust at Rs 77bn (5.2x TTM revenues).

West Coast refinery may slip to FY19: With Rs77 bn in order backlog, (~4x Book Bill for FY18E revenue) the visibility is closer to all-time best. The major ongoing projects include, but not restricted to, are: BSVI and other expansion work for IOCL, CPCL, HMEL, MRPL and BPCL. AS we know that Bharat Petroleum Corporation, Hindustan Petroleum Corporation and Indian Oil Corporation have signed a Consortium Agreement on December 07, 2016 to carry out pre-project activities for setting up of West Coast Refinery and a Petrochemical Project of 60 MMTPA capacity. And thankfully, Maharashtra Govt. has identified and acquired the land. Thereby, we think ENGR has a strong pipeline and backlog that can flip the fortunes. But this...