January 20, 2017 / 12:52 IST
Engineers India (EIL) is well placed to benefit from a pickup in the refining capex in India. Refining capacity expansion of 70 MTPA across key PSUs is planned over the next 4-5 years. Consequently, EIL is all set for a sustained growth in order inflows post four years of a lull. With rising profitability at OMCs, confidence on capex is high.
Outlook
Earnings in 1HFY17 have been primarily led by provisions write back, which is expected to continue in 2HFY17E as several projects are due for closure. However, as BS-VI up-gradation projects (won in 1HFY17) come into execution, there will be a substantial improvement in the earnings quality of the company. We expect an EBITDA/PAT CAGR of 24%/17% over the FY17-19E period. Initiate with BUY.
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