Engineers India reported a bad set of numbers. The reported top-line of the
company was at Rs 6.0 bn way below our expectations of Rs 7.4 bn. Reported
top-line declined by 23.7% on year-over-year basis (32.8% & 10.4% fall in
Turnkey & Consultancy business, respectively).
At the EBITDA front, company reported an EBITDA of Rs 1.3 bn against our
expectations of Rs 1.9 bn. On other hand, reported EBITDA margins of the
company were at 21.7% (vs. 23.0% a year ago & 25.3% in previous quarter).
32.8% fall in year-over-year Turnkey business top-line led to 44.1% fall in the
year-over-year sub-contracting charges (to Rs 871.8 mn). Increased
contribution of Consultancy business (47.9% in Q3FY13 vs. 40.8% in Q3FY12)
coupled with marginal cool-down in raw material prices, translated to 25.3%
year-over-year fall in construction materials (to Rs 1.9 bn).
If we look at Q3FY13 segment-wise EBIT margins, both, Consultancy & Turnkey
business on a year-over-year basis, witnessed margin compression scenario.
Unadjusted EBIT margins of Consultancy business declined from 45.0% a year
ago to 41.5% in Q3FY13. Further, Turnkey business witnessed 261 bps
unadjusted EBIT margin compression on a year-over-year basis to 7.6%.
EIL reported a PAT of Rs 1.3 bn, below our expectations of Rs 1.7 bn. Despite
EBITDA margin compression, PAT margins expanded on a year-over-year basis
by 279 bps to 21.9%. PAT margin expansion has been on a/c of (1) 50.6%
surge in other income (to Rs 669.3 mn), (2) 12.8% decline in tax expenses (to
Rs 632.9 mn).
Update on Order Book
During the quarter EIL reported Rs 544 mn of Order Inflows (OI’s). In the first nine
months of FY13E, EIL has reported OI to the tune of Rs 12.8 bn. With 1 more quarter
to go in FY13E, EIL would have a daunting task of reporting OI’s in the range of
Rs 17.2-22.2 bn to attain its FY13E OI guidance of Rs 30-35 bn. In our opinion the
company will miss-out on the guidance if no quick decission is taken by various
govt. agencies, through which it gets orders
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