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Dolat Capital
Engineers India (Buy)
CMP: ₹238.70
Target: ₹300
Our investment thesis on Engineers India hinges on the company’s leadership position in the domestic market and its competence to successfully bid and execute projects in the international markets. In the backdrop of two large project cancellations, the stock performance will be significantly muted over the next 2-3 quarters. However, we continue to believe in EIL’s ability to replicate its success in domestic markets to win large projects in the international markets. With execution of Dangote projects (20 mtpa refinery), EIL would built pre-qualifications for almost every large refinery projects which would go long way in growing the international business. Revival in the domestic infrastructure capex would also benefit the company in the long term.
We downgrade our FY15E EPS estimate to ₹13.1 a share (₹15.7 earlier). On our revised estimates, the stock trades at P/E multiple of 18.6x and 14.5x for FY15E and FY16E respectively. We continue to maintain our long term positive view on the stock.
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