Buy Engineers India; target of Rs 255: Prabhudas Lilladher

Prabhudas Lilladher's research report on Engineers India

Engineers India (EIL) posted a strong quarter with 33.7% YoY revenue growth and a 13bps YoY improvement in EBITDA margin to 9.2% while Rs256mn loss from JVs/associates dragged down consolidated PAT. Supported by a sustained execution ramp-up, management has raised its FY26 revenue growth guidance to over 25% and remains confident of surpassing ~Rs80bn in order inflows, driven largely by strong momentum in the international consultancy segment. Domestically, despite some tariff-related softness, the outlook remains healthy with key opportunities such as the Paradeep expansion, Andhra Refinery, and IOCL’s specialty chemicals project in the pipeline. The stabilization issues at Ramagundam have been resolved, and profitability is expected to improve, aided by tailwinds from India’s urea shortfall. Management is also pursuing diversification opportunities across coal gasification, green hydrogen, and bio-refinery projects, which are expected to open new growth avenues.

Outlook

We believe EIL’s long-term growth prospects remain intact given 1) strong order book prospects in non-oil & gas and oil & gas projects 2) Strong traction in overseas consultancy business from Middle East & Africa region 3) opportunities in energy transition & infrastructure, and 4) lean balance sheet. The stock is currently trading at a PE of 15.9x/13.4x on FY27/28E. We roll forward to Sep’27E and maintain our ‘Buy’ rating valuing the Consultancy/Turnkey segments at a PE of 22x/10x Sep’27E (22x/10x Mar’27E earlier) arriving at a SoTP-derived TP of Rs255 (Rs245 earlier).

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