Accumulate Engineers India; target of Rs 330: P Lilladher

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Accumulate Engineers India; target of Rs 330: P Lilladher

Prabhudas Lilladher is bullish on Engineers India and has recommended accumulate rating on the stock with a target of Rs 330 in its February 4, 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 330 in its February 4, 2011 research report.

"Engineers India (EIL) posted a robust top-line growth of 37.1% at Rs 6.7 billion which was ahead than our estimates of Rs 5.6 billion. However, as compared to last year (same period), sales composition changed significantly and is now more skewed towards Lump Sum Turnkey Projects (LSTK). LSTK projects had a share of 57.6% in total sales as against 46.5% in Q3FY10. On the other hand, consultancy business growth trend slowed down with an 8.6% YoY and 5.5% QoQ growth in sales."

"EBIT margins individually improved for both the segments by 115bps and 354bps YoY for Consultancy and LSTK segments, respectively. Overall, EBITDA margins in Q3FY11 cooled off by 268bps YoY to 23.3% on account of increased share of LSTK projects. EBIT in absolute terms also increased by 11.3% and 176% for Consultancy and LSTK segments, respectively. Other Income has decreased by 23% YoY (on account of lower cash and yields) which has led to only a 10.2% YoY PAT growth despite a 22% YoY EBIT growth. However, reported PAT of Rs 1.2 billion was above our expectations of Rs1.1billion. The current order book stands at Rs 81 billion and the order inflow for 9MFY11 stood at Rs 38 billion and for Q3FY11 it stood at Rs 19 billion. EIL is L1 for projects aggregating to Rs 7 billion. Cash and Equivalents stand close to Rs 17 billion."

"A robust balance sheet and order backlog, translating into a Book- To-Bill of 3x FY11E, provides sustained earnings visibility for the coming years. The stock is currently trading at 17.4x FY12E EPS of Rs 15.9x FY13E EPS. Accumulate the stock with a target of Rs 330," says Prabhudas Lilladher research report.

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To read the full report click on the attachment