Prabhudas Lilladher sees more upward re-rating in EIL ahead

The follow-on public offer of state-run Engineers India (EIL) has opened for subscription. Prabhudas Lilladher has recommended subscribing to the issue from long-term perspective.

EIL is an engineering consultancy company providing design, engineering, procurement, construction and integrated project management services, principally focused on the oil and gas and petrochemicals industries in India and internationally. The price band for the 334 lakh shares issue, which closes on July 30, is at Rs 270-290 per share.

The report says, "A robust order backlog translating into a Book–To–Bill of 3.1x and GOI’s robust O&G capex, provides sustained earnings visibility for the coming years. At the upper band, stock is expected to discount FY11E EPS of Rs15.3 by 18.9x and FY12E EPS of Rs17.4 by 16.7x. High EBITDA margins, steady RoE’s and strong cash balance, along with sustained growth, makes this company attractive from the current levels. With further additions in the order book, we expect the stock to continuously get re-rated upwards, going forward. Hence, we recommend subscribe to the issue from long-term perspective."

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