Prabhudas Lilladher's research report on Engineers India
Engineers India (EIL) reported subdued revenues of Rs8.4bn, down 6% YoY led by covid related execution challenges. Overall weak operating performance at turnkey levels led to lower than expected profitability. Margins in turnkey projects were weak at 1.4% v/s 3% in 3QFY20 and 1.9% in 2QFY21 thereby lowering overall margins. Order inflows de-grew by 48% YoY to Rs1.9bn led by delay in ordering activity. Order inflow mainly came from domestic consultancy segment (~97%). Order book declined by 18% YoY to Rs83bn. Management sounded cautious about the tendering pipeline for FY21E, but expected awarding activity to be healthy in FY22E. Key projects such as NRL, HEML, petrochemical projects, etc. to be awarded in FY21E. HMEL petchem, Panipat refinery expansion, Kaveri Basin (few packages), small pipeline orders from LPG segment are expected to be awarded by FY22E.
Outlook
The stock is currently trading at 12.4x/9.8x/7.6x FY21E/22E/23E. We roll our estimate to FY23 and maintain BUY rating on the stock with a revised TP of Rs115 (Rs104 earlier).
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