Accumulate Engineers India; target of Rs 312: PLilladher

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Accumulate Engineers India; target of Rs 312: PLilladher

Prabhudas Lilladher is bullish on Engineers India and has recommended accumulate rating on the stock with a target of Rs 312 in its May 27, 2011 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 312 in its May 27, 2011 research report.

"Engineers India (EIL) posted a robust top-line growth of 47.8% at Rs9.4bn which was ahead of our estimates of Rs8bn. For FY11, sales stood at Rs28bn, growing by 41.6% YoY. However, as compared to last year (same period), sales composition changed significantly and is now more skewed towards LSTK. LSTK projects had a share of 68.2% (PY: 51.6%) in total sales for Q4FY11 and for FY11, it stood at 60% as against 47.1%."

"EBIT margins individually improved by 74bps YoY for LSTK segment in Q4FY11. However, Consultancy margins plunged by 641bps YoY for the same period. Similarly for FY11, EBIT margins for LSTK improved by 170bps YoY at 11.5% and consultancy was at 43.1%, an improvement of 290bps YoY. Overall, EBITDA margins in Q4FY11 and FY11 cooled off by 581bps and 196bps, respectively. Other Income has increased by 71% YoY (on account of provision write-backs of Rs210m) which has led to a 32% YoY PAT growth. However, adjusted PAT of Rs1.5bn (21.3% YoY growth) was above our expectations of Rs1.3bn. The current order book stands at Rs75.5bn and the order inflow for FY11 stood at Rs41bn and for Q4FY11 it stood at Rs1.5bn. EIL is L1 for projects aggregating to Rs7bn. Cash and Equivalents stand close to Rs17bn.

"A robust balance sheet and order backlog, translating into a Book-To-Bill of 2.7x FY11, provides sustained earnings visibility for the coming years. The stock is currently trading at 14.3x FY12E EPS of Rs12.5x FY13E EPS. Maintain 'Accumulate'," says Prabhudas Lilladher research report.  

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