Motilal Oswal - Engineers India Ltd. (ENGINERSIN) MOSL: ENGINEERS INDIA (Buy)-Hurt by weak Turnkey segment-order backlog provides strong revenue visibility

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Motilal Oswal

EUR 120.00 For Business Accounts Only

MOSL: ENGINEERS INDIA (Buy)-Hurt by weak Turnkey segment-order backlog provides strong revenue visibility

Engineers India: Hurt by weak Turnkey segment; order backlog provides strong revenue visibility

(ENGR IN, Mkt Cap USD1b, CMP INR111, TP INR145, 31% Upside, Buy)

Weak performance at operating level: Sales increased 22% YoY to INR5.8b, below our estimate of INR6.5b. EBITDA declined 30% YoY to INR949m, with the margin of 16.4% ahead of our estimate of 15.7%, given the better-than-estimated margin in Consulting segment. EBIT margin shrank by 770bp YoY to 30% in Consulting and by 600bp YoY to 6.1% in EPC off a high base (3QFY18 margins were supported by provision reversal). PAT declined 16% YoY to INR908m (our estimate: INR999m).
EPC/turnkey project sales increased 164% YoY to INR2.3b, driven by healthy execution of orders in hand for BS-VI upgrades. On the other hand, Consulting sales declined 11% YoY to INR3.4b.
Order inflow declined 20% YoY to INR908m; order book of INR107.9b (+30% YoY) provides robust revenue visibility. Key orders won in 3QFY19 were: (a) HP green R&D center at Bengaluru EPC order (INR107m), (b) PMC and EPCM service for Dangote refinery project (INR168m) and (c) design and detailed engineering for project engineering services (INR94m). Order book of INR107.9b stands healthy, with revenue visibility of 4.7x its TTM revenue.

11/02/2019 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)-Hurt by weak Turnkey segment-order backlog provides strong revenue visibility

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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