LIC trims stake in Engineers India by 2%, now holds 3%

Life Insurance Corporation of India (LIC) has trimmed its stake in Engineers India, a leading global engineering consultancy and EPC company, by about 2% through open market.

The insurance behemoth disclosed in a regulatory filing on November 23 that it sold 1.14 crore shares of Engineers India during the period from February 02, 2021, to November 22, 2023, at an average price of ₹118.08 apiece. As a result of this transaction, LIC's overall stake in Engineers India has come down to 3.122% from the previous 5.155%.

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Engineers India, owned by the Government of India, operates under the control of the Ministry of Petroleum and Natural Gas (MoPNG). After experiencing four consecutive years of losses from CY18 to CY21, the company's shares have shown a significant turnaround, with a positive return of 12.65% in CY22.

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This positive momentum has continued into the current year, with the stock delivering an impressive return of 84.11% thus far, spiking from ₹79.30 apiece to their current position of ₹146.

On September 05, the stock surged by approximately 1.4%, reaching an all-time high of ₹167.30 per share. Following this peak, the stock encountered a brief downturn and is currently trading at a level that is 13% below its historic high.

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For the September quarter ending, the company reported a 69% YoY rise in its consolidated net profit to ₹127 crore. During the same period last year, the company recorded a net profit of ₹75 crore. Its revenue from operations came in flat at ₹790 crore on a YoY basis and dropped 3.14% on a QoQ basis.

Following the company's Q2 performance, domestic brokerage firm Prabhudas Lilladher has upgraded its rating on the stock to ‘buy’ from 'accumulate' (factoring in recent correction in stock price) with a revised target price of ₹166 apiece ( ₹165 earlier), valuing it at a PE of 16x Sep-25E.

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The company is increasing efforts in overseas business to bring it to a similar level as the domestic business, with a focus on markets such as Algeria, Nigeria, and South America. EIL is also concentrating on growing its new decarbonisation business, including green hydrogen, green ammonia, and biofuels. The order book and pipeline remain healthy and will drive revenue growth in the coming years, said the brokerage.

Prabhudas Lilladher believes EIL’s long-term growth prospects remain intact given a healthy order book, a strong project pipeline, diversification into the decarbonisation business, and a lean balance sheet. It estimates a revenue and PAT CAGR of 13.2% and 21.6% over FY23–26E.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.