Motilal Oswal is bullish on Engineers India recommended buy rating on the stock with a target price of Rs 95 in its research report dated November 23, 2021.
November 24, 2021 / 03:30 PM IST
Motilal Oswal’s research report on Engineers India
ENGR’s 2QFY22 revenue was 12% below our estimate, with the miss led by lower than expected revenue in the Consultancy segment. Operating profit came in line with our estimate, with a favorable revenue mix (54% share of Consultancy segment revenue) leading to higher than estimated EBITDA margin at 9.3% (est. 8.2%). Lower than expected other income led to adjusted PAT 15% below our estimates. -Order inflows in 2Q/1HFY22 stood at INR11.7b/INR14.5b (+96%/+115% YoY), and ~30% higher v/s 1HFY20 levels, thereby indicating a revival in ordering activity in its key end-market of Oil and Gas. While Oil and Gas continues to remain a key end-market for ENGR, the management is exploring other end-markets where its expertise can be implemented (Biofuels). Order book declined by 11% YoY to INR80.3b, with an order book-to-revenue ratio at 2.8x – the lowest in the last four years. Owing to superior execution and lower than expected order inflows, a depleting order book remains a concern, though it is not alarming at this stage.
We maintain our Buy rating with a TP of INR95/share (11x FY24 EPS).
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