Motilal Oswal - Engineers India Ltd. (ENGINERSIN) MOSL: ENGINEERS INDIA (Buy)-Execution on track-OMC-led business potential attractive

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Motilal Oswal

MOSL: ENGINEERS INDIA (Buy)-Execution on track-OMC-led business potential attractive

Engineers India: Execution on track; OMC-led business potential attractive

(ENGR IN, Mkt Cap USD1.0b, CMP INR117, TP INR155, 33% Upside, Buy)

Weak performance at operating level: Sales increased 59% YoY to INR6.8b, ahead of our estimate of INR5.7b. EBITDA declined 34% YoY to INR915m, with the margin of 13.4% coming in below our estimate of 17.3% due to a higher share of EPC sales at 51% (v/s 22% in 2QFY18). EBIT margin shrank by 270bp YoY to 29% in Consulting and by 520bp YoY to 6.5% in EPC (after adjusting for provision write-back of INR374m in 2QFY18) due to an adverse revenue mix. PAT fell 18% YoY to INR978m, as against our estimate of INR939m.
EPC/Turnkey project sales increased 263% YoY to INR3.5b, driven by healthy execution of orders in hand for BS-VI upgrades. On the other hand, Consulting sales were flat YoY at INR3.3b.
Order inflow was healthy at INR56.1b (+249% YoY); order book of INR114.6b (+29% YoY) provides robust revenue visibility. Key orders won during the quarter: (a) HPCL Rajasthan refinery Limited EPC order (INR43b), (b) PMC services for execution of Rajasthan refinery project (INR11.8b) and (c) EPCM services for bio refinery project at Numaligarh (INR440m). Order book at INR114.6b stands healthy, with revenue visibility of 5.1x its TTM revenue.

16/11/2018 8 EN

Underlying

Engineers India Ltd.

Engineers India Limited (EIL) is an engineering consultancy, and engineering, procurement and construction (EPC) company in the hydrocarbons and petrochemicals industry. The Company's segments are Consultancy & Engineering Projects, and Turnkey Projects. Its services include technologies, pre-Front End Engineering Design (FEED) and FEED, project management, procurement services, construction services and specialized services. The Company focuses on various sectors, including fertilizer and liquefied natural gas (LNG), non-ferrous metallurgy, infrastructure, strategic crude oil storage, nuclear and solar energy, and exploration and production. It offers various technologies for petroleum refining, oil and gas processing, and aromatics. The Company's projects include Guru Gobind Singh Refinery Project, Bina Refinery Project, Panipat Naphtha Cracker Project, Dabhol Bangalore Pipeline Project, Phase II Expansion of Alumina Refinery and Deen Dayal Field Development Project.

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INE510A01028 National Stock Exchange of India India

Provider

Motilal Oswal

Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.

Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.

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MOSL: ENGINEERS INDIA (Buy)-Execution on track-OMC-led business potential attractive

ENGINEERS INDIA suffers a double requalification, which weighs heavily on its rating, now at Neutral.

MOSL: ENGINEERS INDIA (Buy)-Revenue misses our estimate; order inflows robust

Engineers India's Q3FY20 results (Outperformer) - Strong execution but margins fall

MOSL : HOME FIRST FINANCE COMPANY: Earnings in-line with sustained improvement in asset quality

MOSL : SHOPPERS STOP: Ticking the right boxes

MOSL : ERIS LIFESCIENCES: Enhanced efforts toward product launch-related activities

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