Buy Engineers India; target of Rs 93: Motilal Oswal

Motilal Oswal 's research report on Engineers India

Revenues came in higher than estimated, led by superior performance in the Turnkey segment (74%/50% YoY increase in 4QFY20/FY20). With this, the revenue share of the low-margin Turnkey segment stood at 51% in FY20, up from 45% in FY19. An adverse revenue mix led to decline in EBITDA margins in 4QFY20/FY20. The order book declined 15% YoY to INR95.5b, with OB/Rev at 3x, the lowest in the last four years. With superior execution and lower order inflows, a depleting order book remains a concern, although it is not alarming at this stage.

Outlook

We tweak our FY21/FY22E EPS by -2%/+1% and maintain our Buy rating, with TP of INR93 (prior: INR100).