Engineers India Ltd. share price target

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).

EIL Q2FY18 outperformed our estimate due to 1/ strong execution in PMC division; 2/ higher operating margin supported by operating leverage and 3/ provision write back (one off items) in the LST division (Lump Sum Turnkey Project). Order inflows grew substantially in the quarter led by PMC orders; current order backlog stands at Rs 88.1 Bn (highest level ever) implying three year revenue visibility. We reiterate our long term positive view on EIL; expect significant improvement in FY19 earnings driven by 1) improved execution in 2HFY18-FY19 2) improved margins on back of operating leverage. We increase FY19 earnings estimate to...

Reiterate BUY with a TP of Rs 201/sh (27x Sept 19E core EPS + cash). Engineers India (ENGR) reported the highest-ever order book at Rs 88.7bn vs 51/77bn YoY/QoQ (5.7x TTM revenues), with strong order inflows at Rs 16bn vs Rs 1.5/3.4bn YoY/QoQ. Sales grew 27/14% YoY/QoQ at Rs 4.29bn vs our expectation of Rs 3.9bn, riding on a 21/50% rise in PMC/LSTK sales to Rs 3.3bn/961mn. EBITDAM stood at 32.4% (+473bps YoY). EBITDA grew 48/70% YoY/QoQ to Rs 1.4bn, mainly on account of a 610bps YoY rise in EBITM of LSTK to 50.6%. With wage hikes effected in Jan-17, staff costs rose 22% YoY to Rs 1.9bn. Net profit rose 27% to Rs 1.2bn.

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...

Revenue increased 9.8% YoY to | 375.4 crore, which was below our estimate of | 446.8 crore. This was primarily on account of lower order booking in the turnkey (EPC) segment. Turnkey segment contributed only 13.6% to the topline of the company (| 50.9 crore) vs. our expectation of ~30% for the quarter EIL reported strong EBITDA margins of 21.8% (our estimate of 20%) due to increased contribution from high margin consultancy segment. The consultancy segment contributed 86.4% to the topline and ~95%...

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).

Revenue rose by 36.28% to Rs. 442.93 Cr in Q4FY17 when compared to the previous quarter

ICICI Securities Ltd | Retail Equity Research Engineers India (EIL) reported Q4FY17 numbers, which were below our estimates. The key miss was on account of a significant jump in...

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...

Engineers Indias (ENGR) 4QFY17 results were in line with our estimates. Revenue grew 47% YoY on a low base, as execution started picking up in projects won in H1FY17. As guided by mgmt, provision write-backs continued (Rs 570mn in 4QFY17), leading to PMC/LSTK margins of 37.2/35.3% resp.

Engineers India (EIL), a Navratna public sector enterprise, is one of the oldest companies in the Indian public sector. Over the years, the company has emerged as a market leader in the Indian hydrocarbons segment with expertise in design, engineering and project implementation. EIL has consistently grown its topline & bottomline over the last 10 years at a CAGR of 11.3% and 6.4%, respectively, in FY07-16. This is despite weak crude prices in the last few years and, consequent, deferral of capex spending by its key customers. Core competency in...

Revenue decreased by 4.1% to Rs. 325.01 Cr in Q3FY17 when compared to the previous quarter. Also, it fell by 11.77% when compared with Q3FY16.

Engineers Indias (ENGR) 3QFY17 results were in line with our estimates. Revenue declined 12% YoY on the back of a weak opening order book. As guided by the mgmt, provision write-backs continued (Rs 90mn in 3QFY17), leading to LSTK margins of 28.4% ( 1240bps YoY). Consequently, APAT for the quarter grew 26% YoY to Rs 850mn. Though the order inflow (Rs 2.7bn) for the quarter was muted, ENGR has announced large orders in 4QFY17 which could help it to close with an order book of over Rs 65bn.

Order pipeline and backlog both are strong: With Rs73bn in order backlog, (~5x Book Bill for FY17E revenue) the visibility is strong. Perhaps at all-time best. Against the company presentation of Rs.51bn, we have included the Vizag refinery orders. Here, the order is split into two: Rs.4bn in PMC contract. This is high-margin segment. And add another Rs.21bn in LSTK, a low-margin work in nature. The entire project, as per the exchange filing, is expected to...

Engineers India (EIL) is well placed to benefit from a pickup in the refining capex in India. Refining capacity expansion of ~70 MTPA across key PSUs is planned over the next 4-5 years. Consequently, EIL is all set for a sustained growth in order inflows post four years of a lull. With rising profitability at OMCs, confidence on capex is high.