Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  

| More

Engineers India - Q2 FY21 Result Update - YES SECURITIES

Posted On: 2020-11-23 21:38:24 (Time Zone: Arizona, USA)

Engineers India (Q2 FY21) - BUY (Target Rs102, Upside 39%)

ENGR's business prospects are improving as management expects execution run-rate to improve significantly in H2FY21. Sales dropped 5.6% yoy (-6% vs our est.) as Consultancy (PMC)/Turnkey (LSTK) sales were down by 2%/9% in Q2FY21. Order book is at Rs89.8bn (3x TTM sales) while domestic refining PMC business has strong order pipeline of ~Rs25bn in next 18months. EBITDA was down 28% yoy as LSTK segment margin slumped from 7.7% to 1.9% while consultancy segment margin largely remained flat. Adj. PBT was down 25% yoy (-9% vs our est.). CFO was at Rs452mn vs negative Rs309mn in H1FY20. Proposed share buyback (Rs5.87bn) via a tender offer at Rs84/share. Govt of India (GoI) will participate in buyback; however, GoI intends to keep its stake at least 51%.

When compared to GDP growth, the average energy multiplier for India has been at ~0.8x of GDP growth. Hence, at ~5% CAGR demand for petroleum products, India is likely to face supply deficit situation by FY25. In addition, current refining capacity utilization stands at 100%+, which warrants significant capex, implying improving business prospects for ENGR over medium to long term. PMO has set plans to nearly double its oil refining capacity in the next 5 years (refining capacity expansion of ~250MMTPA), so the cumulative capex is expected to be Rs7-8trn, implying a PMC opportunity size of ~Rs450-500bn for ENGR. ENGR's core business is services based on strong technical knowhow which enables it to operate on negative working capital & negligible capex (Infinite core RoIC) leading to strong free cash flows. We expect FCF of Rs34bn over FY20-FY25E, implying superlative avg. FCF yield of 15%. Cut FY21E EPS by 14% to factor lower other income & earnings miss in Q2FY21. Trading at an inexpensive valuation (-1.5SD of long term average) and we see it as being on the cusp of the next capex cycle upturn & expect 38% EBITDA CAGR over FY21E-FY23E. Given its debt-free balance sheet, market leadership, and strong execution capability, retain BUY with TP of Rs102.

Shares of ENGINEERS INDIA LTD. was last trading in BSE at Rs.73.35 as compared to the previous close of Rs. 70.65. The total number of shares traded during the day was 416788 in over 2932 trades.

The stock hit an intraday high of Rs. 73.85 and intraday low of 70.5. The net turnover during the day was Rs. 30262716.

Source: Equity Bulls

Click here to send ur comments or to

Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only., its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.

Other Headlines:

HDFC Bank Q3 FY21 - 'Stellar Show' - Retain BUY and raise 12m PT to Rs1870 - YES Securities

IPO Review - Indian Railway Finance Corporation (IRFC) - ICICI Direct

HCL Technologies - Q3FY21 First Cut - ICICI Direct

Logistics Sector Update - Indian Railways - getting aggressive - HDFC Securities

Indigo Paints - IPO view - YES SECURITIES

Infosys - Near-term margins will likely come under pressure - ICICI Securities

CESC - 7% dividend yield + higher ESG rating - ICICI Securities

South Indian Bank - Unveils vision 2024; targets RoA / RoE of 1% / 13% by 2024 - ICICI Securities

Maintain BUY on Infosys - Growth certainty on explosive deal wins - HDFC Securities

Maintain ADD on Wipro - Growth acceleration - HDFC Securities

Consumer Durables - Q3FY21 Results Preview - HDFC Securities

Q3FY21 Company Update - Filatex India - ICICI Direct

Q3FY21 Result Update - Wipro Ltd - ICICI Direct

Q3FY21 Result Update - CESC - ICICI Direct

Monthly Inflation - December 2020 - ICICI Direct

Q3FY21 Result Update - Infosys - ICICI Direct

Banks Q3FY21 Results Preview - Scope for optimism beyond a tepid 3Q - HDFC Securities

Consumer Discretionary Companies - Q3FY21 Results Preview Report - HDFC Securities

Pharma Sector Update - Ample catalysts to sustain luster - HDFC Securities

Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research on IIP data

Infosys - Q3FY21 First Cut - ICICI Direct

Wipro - Q3FY21 First Cut - ICICI Direct

HDFC Securities - Real Estate Q3FY21 Results Preview - Has COVID triggered a new cycle?

Industrials Q3FY21 Results Preview - Normalisation done, growth awaited - HDFC Securities

FMCG & Alco Bev - Q3FY21 Results Preview - HDFC Securities

Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research on December 2020 CPI Data

Cement & Building Materials (Tiles) - Results Preview - Robust Performance on Improved Volume - Reliance Securities

Automobile & Auto Ancillary - Results Preview - Strong Results on Healthy Volume Performance in 3QFY21 - Reliance Securities

Q3FY21 Result Update - Tata Consultancy Services - ICICI Direct

Q3FY21 Result Preview - Real Estate & Infrastructure - ICICI Direct

Q3FY21 Result Update - Avenue Supermarts - ICICI Direct

Q3FY21 Result Preview - Metals & Mining - ICICI Direct

Insurance and Capital Markets Companies Q3FY21 Results Preview - Stronger earnings expected across sectors - HDFC Securities

Capri Global Capital - Getting back to normalcy - ICICI Securities

Avenue Supermarts - Fast recovery; there are speed breakers though - ICICI Securities

Tata Consultancy Services - Steady state growth / margins are yet to be seen! - ICICI Securities

Q3FY21 Result Preview - FMCG - ICICI Direct

Cement Sector - Q3FY21 Results Preview - HDFC Securities

Avenue Supermart Q3FY21 Results - Views of YES SECURITIES

The Phoenix Mills - Festive season ushers in consumption revival - ICICI Securities

Quant Pick - Zee Entertainment - ICICI Direct

Q3FY21 Result Preview - Auto and auto ancillary - ICICI Direct

Q3FY21 Result Preview - Capital Goods & Power - ICICI Direct

Q3FY21 Result Preview - Consumer Discretionary - ICICI Direct

Q3FY21 Result Preview - Banking & Financial Services - ICICI Direct

Q3FY21 Result Preview - Cement - ICICI Direct

Stock Tales - Esab India - ICICI Direct

TCS - Q3FY21 First Cut - ICICI Direct

NHPC - Receivables decline; pending issues cleared - ICICI Securities

ICICI Securities - Telecom - Bharti Airtel to outperform yet again...

Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2020