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Engineers India - Q2FY21 Result Update - ICICI Direct

Posted On: 2020-11-25 06:09:34 (Time Zone: Arizona, USA)

Engineers India (EIL) standalone revenues for Q2FY21 were at Rs. 683.4 crore down 5.6% YoY. Consultancy and turnkey (LSTK) segment contributed 51% and 49%, respectively. For Q2FY21, consultancy revenue de-grew 2.5% to Rs. 345.2 crore YoY while turnkey revenue de-grew 8.5% to Rs. 338.2 crore YoY owing to execution slowdown. Absolute EBITDA was at Rs. 77.2 crore, down 27.8% YoY while overall EBITDA margin came in at 11.3%, contracting 350 bps vs. Q2FY20 mainly due to lower margins in turnkey segment. Consultancy & turnkey segments reported EBIT margins of 27% (vs. 27.4% in Q2FY20) and 1.9% (vs. 7.7% in Q2FY20), respectively. PAT was at Rs. 92.7 crore, up 36.8% YoY mainly on account of deferred tax adjustments in base quarter. Other income declined 18.7%, YoY to Rs. 53.3 crore. EIL's board has approved the proposal to buyback ~6.97 crore shares representing 11.06% of total fully paid-up equity shares at a price of Rs. 84/share for aggregate consideration not exceeding Rs. 586.9 crore.

Valuation & Outlook

Going forward, we expect revenue, EBITDA and PAT to grow at -0.3%, 3.3% and 5.4% CAGR, respectively, in FY20-22E with marginally higher contribution from consultancy segment. However, short-term headwinds may affect execution in FY21E amid challenges. EIL's balance sheet continues to remain healthy with zero debt and cash balance of ~Rs. 2500 crore. Its book to-bill is at a healthy ~3x (order book at Rs. 8978 crore). We value EIL at 11x P/E on FY22E EPS of Rs. 7.6 with a revised target price of Rs. 83 per share and change our rating from BUY to HOLD. Key risks are any project headwinds or delays in turnkey segment may further affect revenue growth.

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Shares of ENGINEERS INDIA LTD. was last trading in BSE at Rs.72.95 as compared to the previous close of Rs. 73.7. The total number of shares traded during the day was 169715 in over 974 trades.

The stock hit an intraday high of Rs. 74.5 and intraday low of 72.5. The net turnover during the day was Rs. 12451447.

Source: Equity Bulls

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