Hold Engineers India; target of Rs 110: ICICI Direct

ICICI Direct recommended hold rating on Engineers India with a target price of Rs 110 in its research report dated February 11, 2019.

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February 19, 2019 / 16:03 IST

26 Aug, 2025 12:21

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ICICI Direct's research report on Engineers India

Engineers India (EIL) reported weak Q3FY19 numbers due to higher contribution from the low margin turnkey business Due to strong execution in turnkey segment, revenue booking in this segment jumped 163.8% YoY to Rs 234.5 crore. Accordingly, turnkey segment contributed 40.6% to the overall topline (normally contributes less than 25-35% to the overall business). This helped overall revenues grow 21.9% YoY to Rs 577 crore. Consultancy revenues (Rs 342.5 crore) declined 10.9%YoY for the quarter. We estimated overall revenues of Rs 556.2 crore for the quarter EBITDA declined 29.6% YoY. This was due to 90.5% jump in other expenses due to spike in sub-contracting and construction material expenses (primarily due to higher turnkey contribution). Consultancy and turnkey segments reported EBIT margins of 29.7% and 6.1%, respectively. Overall EBITDA margins came in at 16.4% vs. 28.5% YoY. Other income grew 32% YoY. Accordingly, PAT de-grew 16.3% YoY (against EBITDA decline of 29.6%) to Rs 90.8 crore.

Outlook

On the positive side, EIL’s balance sheet continues to remain healthy with nil debt and cash balance of ~Rs 2300 crore. Also, EIL’s book-to-bill is at healthy ~4.1x (order book at Rs 10,787 crore). We value EIL at 14x P/E on FY21E EPS of Rs 7.8 to arrive at a target price of Rs 110 per share. We maintain HOLD rating on the company.

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