Kotak Securities is bullish on Engineers India has recommended buy rating on the stock with a target price of Rs 212 in its research report dated October 31, 2017.
Kotak Securities's research report on Engineers India
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 factor in pick up in ordering/execution in domestic business and improved margins driven by operating leverage; value EIL at per 26x FY19 core earnings and maintain BUY rating with revised target price of Rs 212 (Rs 182 earlier).
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