Prabhudas Lilladher is bullish on Engineers India has recommended buy rating on the stock with a target price of Rs 104 in its research report dated June 27, 2020.
Prabhudas Lilladher's research report on Engineers India
Engineers India (EIL) reported strong performance amidst challenging environment with healthy execution across both segments- Consultancy (up 14%) and Turnkey (up 74% YoY). During 4Q, company secured orders worth ~Rs1.5bn entirely attributed towards Consultancy segment. Order backlog stands at ~Rs95.6bn as on 4QFY20, of which Consultancy/Turnkey mix stands at 47:53. Execution could be a challenge in 1QFY21E domestically, due to Covid-19 Pandemic impact however it is expected to garner pace from 2Q onwards. Globally, the Dangote project was under execution even during lockdown. Management expects ordering pipeline from key project such as NRL, Chennai refinery, Panipat expansion and Mumbai refinery of BPCL to be awarded in FY21E.
We believe the real magnitude of outbreak and economy slowdown is difficult to assess and there would be some near term impact. As per the management, impact of Covid-19 Pandemic would be limited in terms of execution with margins being stable, however there could be deferment in order inflows. Overall, we believe its strong balance sheet, zero debt, strong order book, growth visibility and higher cash would augur well for EIL in this challenging time. The stock is currently trading at 12.7x/9.7x FY21E/FY22E. We maintain BUY rating on the stock with revised TP of Rs104.
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