PL First Cut – Engineers India(ENGR) 2QFY24

PL First Cut – Engineers India(ENGR) 2QFY24 – Amit Anwani – Research Analyst, Prabhudas Lilladher Pvt Ltd

Engineers India(ENGR) 2QFY24 Results-First Cut- Miss on estimates

Result summary

✳️Reported sales came in at Rs7.8bn, flat YoY (PLe and consensus estimate of ~Rs8.6bn). Consultancy, revenue grew 4.5% YoY to Rs3.6bn, while Turnkey segment declined 4.7% YoY to Rs4.2bn.

✳️Consultancy accounted for 46.5% of total sales (44.2% in Q2FY23) and Turnkey projects contributed for 53.5% (55.8% in Q2FY23).

✳️Reported EBITDA came in at Rs952mn vs Rs420mn (PLe Rs827mn and consensus estimate of ~Rs778mn), with EBITDA margin coming it at 12.2% vs 5.4% in Q2FY23.

✳️Consultancy EBIT margin expanded to 22.8% in Q2FY24 vs 19.4% in Q2FY23.

✳️Reported PAT came in at Rs1bn vs Rs851mn in Q2FY23, (PLe Rs899mn and consensus estimate of Rs808mn).

Awaiting Clarity- In one of the turnkey project executed by the company, there has been settlement with respect to liquidated damages deducted by the Client and accordingly in Q2FY24, revenue & profit from turnkey projects includes an amount of Rs448.9mn Rs445.7mn respectively towards above settlement.

✳️Adjusting to this, Turnkey segment revenue declined 14.9% YoY to Rs3.7bn and margin declined to 1.3% vs 3.1% in Q2FY23.

✳️Order inflows came in at Rs11.4bn vs Rs3.4bn in Q2FY23. Order book stands healthy at Rs81.9bn (1.4x TTM revenue).

✳️At the CMP, the stock is currently trading at PE of 17.2x/13.3x FY24/25E. We have Accumulate rating on the stock with TP of Rs165.