Adjusting for one offs, Engineers India Ltd continued to report disappointing numbers owing to subdued margins. While revenues declined by 1.3 per cent in line with estimates, net profit improved by 5.1 per cent owing to write-backs taken for past projects, adjusting for which net profit would have declined by 58.6 per cent y-o-y.
EIL remains well placed to benefit from expected revival in domestic hydrocarbon space owing to improved balance sheet of domestic oil PSUs. Diversification into other high growth sectors and international market, given low visibility of Greenfield refinery projects bodes well for EIL. Robust order backlog of Rs.3,640 crore in addition to expected inflows of Rs.2,500 crore over the next 15 months will drive growth in the near-term. Further increasing contribution of consultancy segment would aid margins.
Superlative operating margins and low capital requirements ensures high free cash flows (average 3 years free cash flows Rs.310 crore) and strong return ratios (ROCE of +25 per cent).
No comments:
Post a Comment