Brokerage firm Prabhudas Lilladher has increased its target price for Engineers India to Rs 328, driven by record order inflows. The company has already surpassed its annual order target of Rs 80 billion, reaching Rs 81 billion. Investors are focused on the firm's growth in high-margin consultancy projects and its ongoing diversification into infrastructure and nuclear sectors.
Brokerage firm Prabhudas Lilladher has revised its target price for Engineers India Ltd to Rs 328. This update follows a strong performance period where the company’s new order intake has already crossed its full-year guidance of Rs 80 billion, hitting Rs 81 billion year-to-date. The firm’s total order book now stands at Rs 204 billion, providing a clearer view of its future revenue pipeline.
The core strength of the company currently lies in its consultancy business. This segment makes up about 75% of the total order book and is delivering high profitability, with margins hitting 30% in the second quarter of the current fiscal year. Management has set an expectation of 25% margins for the full year, supported by international projects like the Rs 44 billion Dangote venture.
Engineers India is also working to reduce its reliance on traditional hydrocarbon projects. The company is pivoting toward infrastructure, which now accounts for 25% of new orders. There is also a strategic focus on expanding into the fertilizer and nuclear power sectors, with potential orders in nuclear engineering consultancy expected to materialize in the coming fiscal years.
However, investors should remain aware of certain business risks. A significant portion of the order book, around 55%, is tied to overseas projects. While this helps spread risk, it also creates concentration risk, particularly with large contracts like the Dangote project. Furthermore, geopolitical tensions in the Middle East create uncertainty for future order inflows in that region.
On the operational front, the company is looking to speed up its LSTK, or turnkey, segment execution in the second half of the fiscal year. Historically, this segment operates on lower margins compared to the consultancy business. Moving forward, the key things for investors to track include the speed of project execution, the company’s ability to protect profit margins as it integrates newer infrastructure and nuclear projects, and how effectively it navigates the ongoing geopolitical challenges in its key international markets.