Value Pick

3 June 2011

Time Horizon – 12 Months

Engineers India CMP 264 BUY Target 350

Key Matrix We had initiated a report EIL on 14th March, 2011 with a hold
Price (Rs.) 268 view now with improving outlook and tempting valuation of
Market Cap (Rs.Crs.) 9043 the company, we now initiate a BUY reco for a target of Rs.
52 High / Low (Rs.) 372.65/259.20 350.
BSE 532178
NSE ENGINEERSIN Highlights of Analyst meet –

Latest Quarterly results ~ INR 22 billion cash in consolidated Balance sheet.

(Rs Crores) Mar-10 Mar-11 % chg
Net sales 640.33 946.54 47.82 ~ Dividend payout ratio is around 30%.
PBIDT 203.34 254.27 25.05
Interest 1.12 1.46 30.36 ~Strong order book position i.e. 7484 Crores which provide at
Depreaciation 4.16 4.03 -3.13 least 2 ½ years revenue visibility.
PAT 124.92 165.57 32.54
Equity 56.16 168.47 -
~EIL is looking to diversify portfolio by entering into
EPS (Adj.) 3.71 4.91 -
EMERGING and SUNRISE sectors - Infra, Water, Fertiliser,
Financials Consolidated
Nuclear, Solar and city gas distribution.
(in crs) FY10 FY11 % chg
Sales 2013.99 2848.19 41.42 ~Entering into new markets of Brazil and Venezuela.
EBITDA 684.48 814.38 18.98
Interest 1.29 1.47 13.95 ~EIL has strong technical Know How – already registered 12
Depreaciation 13.1 14.51 10.76 patent and 16 patent applications are pending.
PAT 440.47 531.29 20.6
EPS ( Adj) 13.07 15.77 - ~ EIL entered into fertilizer project after 30 years (setting up
Equity 168.47 168.47 - Brown field fertilizer plant at Panki, Kanpur for JP Associate)
FV 5 5 -
PE @ CMP 20.50 17.00 - Financial Performance
ROE 38.16 35.66 -
Strong top line growth, led by growth in Lump Sum Turnkey
Shareholding Pattern Projects:
(%) Dec-10 Mar-11 chg
Foreign 6.96 6.72 -0.2 Engineers India (EIL) posted a robust top line growth of 47.8%
Institutions 6.71 6.89 0.2
at Rs 946.54 Cr. for Q4, FY 11 with PAT growth of 32.54% at
Govt Hodling 0.3 0.3 0.0
Rs. 165.57 Cr. for Q4, FY11
Corp. Holding 1 1.06 0.1
Promoters 80.4 80.4 0.0
Public&Others 4.62 4.63 0.0
Full year basis sales stood at Rs 2948 Crs. Growth of 41.42%
for FY11, while PAT achieved a growth of 20.6%.

However blended margin has seen declining trend because of

change in revenue mix.
 Value Pick
3 June 2011

Time Horizon – 12 Months

Valuations
Financials Estimates
(in crs) FY12E FY13E With huge cash in Balance sheet and plans to diversify business
Sales 3731 4850.5 into various segments open new avenues for top line growth. At
EBITDA 933 1164.1 CMP stock is quoting at 14x and 12x for FY12E and FY13E.
PAT 634 737 With this tempting valuation we initiate a buy with a target of Rs.
EPS 18.83 21.88 350.
Equity 168.47 168.47
FV 5 5
PE @ CMP 14.24 12.25

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