Accumulate Engineers India: Prabhudas Lilladher

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Accumulate Engineers India: Prabhudas Lilladher

Prabhudas Lilladher is bullish on Engineers India and has recommended accumulate rating on the stock with a target of Rs 399 in its November 04, 2010 research report.

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Prabhudas Lilladher is bullish on Engineers India and has recommended accumulate rating on the stock with a target of Rs 399 in its November 04, 2010 research report.

"Engineers India (EIL) posted a robust top-line growth of 26.8% at Rs 5.9 billion which was above our expectations of Rs 5 billion. However, the sales composition changed from last year same period and is more skewed towards Lump Sum Turnkey Projects (LSTK). LSTK projects had a share of 54.1% in total sales as against 45.8% in Q2FY10. On the other hand, consultancy business growth trend slowed down, with a 7.3% YoY growth in sales."

"EBIT margins improved for both the segments by 1445bps and 45.3bps YoY for Consultancy and LSTK segments, respectively. Overall EBITDA margins in Q2FY11 improved by 421bps YoY to 24.7% on account of execution of LSTK projects on open book estimate basis. EBIT in absolute terms also increased by 55% and 56% for Consultancy and LSTK segments, respectively. Other Income has decreased by 41.3% YoY (on account of lower cash and yields) which has led to a 13.8% YoY PAT growth despite a 54.5% YoY EBIT growth. However, reported PAT of Rs 1.2 billion was above our expectations of Rs 1.1 billion."

"The current order book stands at Rs 70 billion which is a 11% YoY growth and the order inflow for H1FY11 stood at Rs 18 billion which is a 50% growth YoY. Cash and Equivalents stand at Rs 17.3 billion. A robust order backlog, translating into a Book-To-Bill of 3.5x provides sustained earnings visibility for the coming years. The stock is currently trading at 22.9x FY11E EPS of Rs 15.1 and 19.1x FY12E EPS of Rs 18.2. Accumulate the stock with a target of Rs 399," says Prabhudas Lilladher research report.

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