Engineers India Ltd. share price target

14 November 2018 Sales increased 22% YoY to INR5.8b, below our estimate of INR6.5b. EBITDA declined 30% YoY to INR949m, with the margin of 16.4% ahead of our estimate of 15.7%, given the better-than- estimated margin in Consulting segment. EBIT margin shrank by 770bp YoY to 30% in Consulting and by 600bp YoY to 6.1% in EPC off a high base (3QFY18 margins were supported by provision reversal). PAT declined 16% YoY to execution of orders in hand for BS-VI upgrades. On the other hand, Consulting sales declined 11% YoY to INR3.4b. green R&D; center at Bengaluru EPC order (INR107m), (b) PMC and EPCM service for Dangote refinery project (INR168m) and (c) design and detailed engineering for project engineering services (INR94m). Order book of INR107.9b stands healthy, with revenue visibility of 4.7x its TTM revenue.

ICICI Securities Ltd | Retail Equity Research Engineers India (EIL) reported weak Q2FY19 numbers due to higher contribution from the low margin turnkey business Due to strong execution in turnkey segment, revenue booking in the segment jumped ~3.5x YoY. Accordingly, turnkey segment contributed 51% to overall topline (normally contributes less than 2535% to overall business). This helped overall revenues grow 58.8% YoY to | 681.4 crore. Consultancy revenues (| 332.4 crore) were flat for...

Engineers India (ENGR) has posted Rs978mn net profit in 2QFY19 (vs. our estimate of Rs1.06bn) mainly due to lower margin and dismal performance of high-margin consultancy business. However, its revenue grew by a healthy 59% YoY to Rs6.8bn led by 3.6x jump revenue from turnkey projects to Rs3.5bn, while consultancy business reported flat sales of Rs3.3bn. Despite strong revenue growth, EBITDA declined by 34% YoY to Rs915mn, while operating margin declined to 13.4% from 32.4% in 2QFY18 due to higher revenue-mix (51% vs. 22% in 2QFY18) of low-margin turnkey projects and one-off in 2QFY18. The margin of consultancy business fell by 275bps YoY to 29%. Order backlog rose by 37% YoY to Rs121.6bn, while order inflow...

Engineers India (EIL) reported a weak operational performance in Q1FY19 due to the changing execution mix i.e. higher turnkey execution and lower consultancy execution. On a YoY basis, turnkey revenues increased ~4x to | 251 crore while consultancy revenue declined 4.4% YoY to | 322.3 crore Thus, overall revenues grew 52.7% YoY to | 573.3 crore. Consultancy...

The company has recovered order inflows of `1660 Crores in consulting for 79 in EPC totaling to ` 2140 Crores. Major orders secured during the year is polymer addition project of over ` 1000 Crores and two EPC projects from ONGC worth `235 Crores and `244 Crores. The order book position as on March 31, 2018 stands at `7873 Crores compared to `7762 Crores last year. The mix is quite similar to...

Engineers India (EIL) reported weak Q4FY18 numbers Revenues increased 15% YoY to | 509.7 crore, below our estimate of | 521.7 crore. This was primarily on account of lower order booking in the consultancy segment. Consultancy & turnkey segments contributed 66.2% and 33.8% to the topline, respectively The company reported EBITDA margins of 11.2% vs. our estimate of 15.4%. This was primarily on account of higher contribution from the low margin turnkey segment. Consultancy segment also reported...

We believe that the weakness in EIL stock price over the last two months is predominantly driven by weak order inflows in the current quarter. We expect key large orders (including HPCL Barmer refinery order) to defer to Q1/Q2FY19. We retain long term positive view on EIL, however tweak FY19/20 estimates to factor in continued sluggish momentum in awarding of new large ticket size orders. We expect EIL valuations to remain under pressure driven by sluggish ordering momentum. Further delays in the awarding of key orders can pose threat to our earnings estimate. We reduce our target PER and value EIL at 23x FY20 (25x earlier)...

ICICI Securities Ltd | Retail Equity Research Engineers India (EIL) reported strong Q3FY18 numbers above our estimates. Strong numbers were mostly on account of variation in orders received (and executed) by EIL during the quarter. The same improved the revenue and operating profit by | 70 crore and | 65 crore, respectively, for the quarter Revenue increased 45.7% YoY to | 473.4 crore, above our estimate of | 405.1 crore. Consultancy and turnkey segment contributed 81.2%...

The share of LSTK recognition will be stronger in FY19. Provision write back makes comparison of LSTK/PMC margins difficult. We expect clean PMC/LSTK EBIT margins in excess of 30% and 5%. We maintain a 41% CAGR in EBITDA between FY17-FY19E. We maintain our TP at...

Reiterate BUY with a TP of Rs 215/sh (27x Dec 19E core EPS + cash). Engineers India (EIL) sales grew 46/10% YoY/QoQ at Rs 4.7bn vs our expectation of Rs 4.3bn, riding on a 42/64% rise in PMC/LSTK sales to Rs 3.8bn/889mn. Revenues were supported by client settlements allowing variation in orders worth Rs 700mn. The order book remains solid at Rs 83bn vs 51/88.8bn YoY/QoQ (4.8x TTM revenues), with muted order inflows at Rs 1.1bn vs Rs 2.7/16.1bn YoY/QoQ. EBITDAM stood at 28.5% (+359bps YoY).