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Engineers India Ltd's September quarter earnings were a mixed bag. As a result, the stock has been hovering at levels seen at the time of results earlier this month.

Slower execution was among the reasons that led to a muted performance of Engineers India. Revenue stood at 648 crore, down 5% year-on-year. Analysts at Motilal Oswal Financial Services said revenues were 12% below their estimates. The miss, according to them, was led by less than expected revenue from the consultancy segment. 

However, a favourable mix, with the consultancy segment contributing about 54% to revenues and turnkey segment contributions at 46%, helped Ebitda margins. Ebitda margins were at 9.3% compared to 14.2% in the previous quarter, even though Ebitda decline 42% sequentially.

Execution pick-up holds key for the company’s prospects. As such, order inflow has been rising. Order book for the consultancy segment rose 20% year-on-year to 5,298 crore, with all orders bagged in 2QFY22 in the segment. The turnkey order book fell 40% to 2,731 crore. Overseas orders comprised 12% of the total order book, with the overall order book at 8,092 crore and inflows in 1HFY22 up 30% compared with 1HFY20 levels.

Looking at the order book and rising order flows, analysts have maintained their positive stance on Engineers India. Analysts at Motilal Oswal Financial Services Ltd have retained earnings estimate and forecast Ebitda, net profit CAGR (com-und annual growth) of -14% and 11% respectively over FY21-24. They expect a reversal in revenue mix in favour of the Consultancy segment to aid profitability over FY22-24.

Those at Edelweiss Securities said, “A cyclically low valuation and significant cash-in-hand optically reflect a decent value on the face of it"

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