Broker’s call: Engineers India (Add)

Target: ₹250

CMP: ₹229.50

Engineers India (EIL) reported a weak set of results with adjusted revenue growing 9 per cent y-o-y to ₹860 crore and adjusted EBITDA of ₹82.80 crore (+15 per cent y-o-y). Order book (OB) remains robust at ₹11,700 crore (+50 per cent y-o-y).

EIL saw an order inflow (OI) of ₹8,200 crore in FY25, comprising INR 46bn of consultancy and ₹3,600 crore of turnkey EPC. Note that consultancy is a more profitable business with healthy margins (about 22 per cent, FY25). We expect consultancy OB to reach ₹9,000 crore from current levels of ₹6,600 crore in mid-FY26, with visibility of IOCL’s order in the near term.

Though some orders may be delayed in the near term, long-term prospects from refinery capacity expansion and EIL’s foray into developing expertise in multiple new technologies provide structural support to the business outlook.

Accounting for a high cash balance, we value its core business separately and add back the cash to factor in investments in the fertiliser and refinery businesses at 150 per cent of the investment amount.

A higher OI from the consultancy business would result in improved margins, with operating leverage playing out. EIL is trading at expensive valuations of 26x FY27E EPS. Thus, we downgrade to Add (from Buy) with a revised TP of ₹250 (₹190 earlier).

Published on June 6, 2025