India Nivesh - Eil

0 50 100 150 200 250 300 1 3 / 0 8 / 2 0 1 3 1 2 / 0 9 / 2 0 1 3 1 2 / 1 0 / 2 0 1 3 1 1 / 1 1 / 2 0 1 3 1 1 / 1 2 / 2 0 1 3 1 0 / 0 1 / 2 0 1 4 0 9 / 0 2 / 2 0 1 4 1 1 / 0 3 / 2 0 1 4 1 0 / 0 4 / 2 0 1 4 1 0 / 0 5 / 2 0 1 4 0 9 / 0 6 / 2 0 1 4 0 9 / 0 7 / 2 0 1 4 0 8 / 0 8 / 2 0 1 4 EIL Sensex IndiaNivesh Research IndiaNivesh Securities Private Limited 601 & 602, Sukh Sagar , N. S. Patkar Marg, Girgaum Chowpatty, Mumbai 400 007. Tel : (022) 66188800 Result Update August 13, 2014 Engineers India Ltd. (EIL) IndiaNivesh Research is also available on Bloomberg INNS, Thomson First Call, Reuters and Factiva INDNIV. STOCK INFO BSE 532178 NSE ENGINERSIN Bloomberg ENGR IN Reuters ENGI BO Sector Consulting Services Face Value (Rs) 5 Equity Capital (Rs mn) 1,685 Mkt Cap (Rs mn) 93,399 52w H/L (Rs) 331/ 122 3m Av g Dai ly V ol in mn (BSE + NSE) 764,503 SHAREHOLDING P ATTERN % (as on 30th Jun. 2014) Promoters 69.4 FIIs 8.6 DIIs 13.0 Public & Others 9.1 Source: BSE STOCK PERFORMANCE (%) 1m 3m 12m EIL -4 12 117 SENSEX 3 8 35 EIL v/s SENSEX Source: Capitaline, IndiaNivesh Research Source: Capitaline, IndiaNivesh Research Daljeet S. Kohli Head of Research Mobile: +91 77383 93371, 99205 94087 Tel: +91 22 66188826 [email protected] Y. Santosh Research Analyst Mobile: +91 77383 93416 T el: +91 22 66188840 [email protected] CMP : Rs.277 Reco : HOLD Target : Rs.301 Reco : HOLD Target : Rs.301 Achieved Current Previous Higher provisions lead to disappointment; Maintain HOLD with PT of Rs 301 Revenues were a slight miss as EIL reported Consulting revenues slightly lower than our expectations. This when coupled with higher than expected provision (reported under other expenses) has led to EBITDA and PA T level disappointment. Reported INSPL (E) Sales 4, 355 4, 473 ‐2.6% Lower than expected revenue from Consulting business led to top-line miss EBITDA 547 891 ‐38.6% Lower than expected revenue booking from high margin Consulting business & higher than exp. provisions led to EBIT DA disappointment PAT 804 1, 043 ‐22.9% EBITDA disappointment has flown down to PAT level too EPS 2.39 3. 10 ‐22.9% Q1FY15 Deviation (%) Comments Rs in mn Source: Company Filings; IndiaNive sh Research Q1FY15 Result Highlights: EIL reported revenues of Rs 4,355 mn, down 1.7% y/y and 12.0% q/q. Fall in y/y revenues is mainly due to 20.4% decline in high margin Consultancy revenues (~55% of Q1FY15 revenues). EIL reported EBITDA of Rs 547 mn, down 53.1% y/y and 24.8% q/q. EBITDA margins of the company were at 12.6% vs. 14.7% in previous quarter and 26.3% year ago. Decline in y/y EBITDA margins is attributable to shift in business mix towards lower margin Turnkey business (and sharp decline in high margin Consultancy business) in Q1. In line with EBITDA de-growth, PAT reported 37.8% y/y and 22.4% q/q de- growth to Rs 804 mn. PAT margins of the company declined from 29.2% a year ago and 20.9% in previous quarter to 18.5% in Q1FY15. After taking in to account revenues booked during the quarter, we expect EIL to end Q1FY15 with Order book of ~Rs 39.3 bn, which gives revenue visibility of ~24 months. At CMP of Rs 277, Engineers India stock is trading at FY15E & FY16E, P/E multiple of 17.3x & 14.7x, respectively. On assigning 16.0x forward P/E multiple to our FY16E EPS estimates of Rs 18.8/share, we arrive at price target of Rs 301. Given the limited upside we maintain HOLD rating on the stock with positive bias. Q1FY15 Result Update: EIL reported revenues of Rs 4,355 mn, down 1.7% y/y and 12.0% q/q. Fall in y/y revenue s is mainly due to 20.4% decline in high margin Consultancy revenues (~55% of Q1FY15 revenues). Slower revenue booking in Consultancy segment is owing to client side delays across some of the domestic projects (domestic Consultancy business reported 25.1% y/y de-growth to Rs 1,984 mn). Despite constituting 46% of the opening order book, Turnkey segment reported strong 37.1% y/y revenue growth to Rs 1,974 mn.

India Nivesh - Eil

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