Engineers India Ltd (BUY): Fifth consecutive quarter of disappointment - Ambit

Engineers India's (EIL) significant revenue miss (24% lower than our estimates) was yet again due to materially lower revenues in the lumpsum turnkey projects (LSTK) segment (49% lower than our estimates). Whilst EBITDA growth continued to disappoint, EBITDA margins improved due to higher share of the consulting business. The revenue decline in the LSTK segment would decelerate to 9% in 2HFY14, as EIL executes the large Rs6.7bn order won in August 2013. We have further cut our revenue and EBITDA estimates for FY14-15 by 5% due to slow LSTK execution. We expect revenues and PAT to decline by 10% and 4% in FY14 respectively. An operational recovery catalyst will remain absent but a special dividend and FPO over the next 3-4 months could be catalysts for the stock. The stock is currently trading at 8.0x FY14 EPS and 4.4x FY14 EBITDA. We retain our BUY stance.

Source : Equity Bulls

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