Engineers India Q3 Results Review - Muted Quarter; Turnkey Margin Improves: Prabhudas Lilladher

Prabhudas Lilladher Report

We revise our FY24/25E earning per share estimates of Engineers India Ltd. by -15.4%/-10.5% as potential change orders may negatively impact Consultancy margins and downgrade our rating to ‘Hold’ from Buy (factoring in steep run-up in the stock price) with SOTP based target price of Rs 256 (Rs 166 earlier).

Engineers India reported 3.0% YoY revenue growth with Ebitda margin falling 14 basis points YoY to 5.8%. Exports are a core focus for the company as it is growing its presence in Algeria and Nigeria, focusing on active oil and gas markets like Abu Dhabi, Kuwait, Oman, Saudi Arabia, and Egypt, and penetrating Guyana in South America.

Further, a slate of upcoming petrochemical projects, including three mega complexes (one in Nigeria, two in India), may provide a boost to the order book. Engineers India is also focusing on niche projects in data centers, airports, etc. to grow its infrastructure business.

There are considerable opportunities in energy transition, including green hydrogen, ethanol blending, SAF, Solar CSP, etc. and Engineers India aims to expand share of energy transition in the mix from 7-8% to 15- 20% in a couple of years.

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