ICICI Direct is bullish on Engineers India recommended buy rating on the stock with a target price of Rs 92 in its research report dated June 27, 2020.
ICICI Direct's research report on Engineers India
Engineers India (EIL) reported overall decent set of Q4FY20 numbers. Standalone revenues came in at Rs 853.8 crore with strong growth of 39.4% YoY. Consultancy and turnkey (LSTK) segments contributed 47%, 53%, respectively. While for FY20 revenue grew 31% to Rs 3203.1 crore YoY with 49% contribution from consultancy and 51% from turnkey segment. Absolute EBITDA came in at Rs 111 crore, up 19% YoY while overall EBITDA margin came in at 13%, down 220 bps YoY mainly due to a change in the business mix. Consultancy and turnkey segments reported EBIT margins of 34.2% (vs. 28.7% in Q4FY19) and 2.9% (vs. 6.3% in Q4FY19), respectively. EIL reported PAT at Rs 116.5 crore, up 22.8% YoY. Other income grew 14.9%, YoY to Rs 68.5 crore. For FY20, PAT grew 16.3% to Rs 430.3 crore YoY.
We value EIL at 11.5x P/E on FY22E EPS of Rs 8.0 with a revised target price of Rs 92/share and maintain BUY rating. Key risks: Any project related headwinds or delays in turnkey segment may further affect revenue growth.
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