Engineer India CMP 71
EIL is a CPSU with majority ownership of the GoI operating under the administrative control of Ministry of Petroleum and Natural Gas (MoPNG). EIL provides consultancy and engineering services (C&E; around 49% of total revenue in FY20) and undertakes turnkey contracts. EIL has been a leading domestic provider of C&E services in India, especially in hydrocarbon and petrochemical sector.
EIL has strong operating cash flows and liquidity position is also sound. EIL can be benefitted in longer run initiatives and policy reforms undertaken by the GoI such as Atmanirbhar Bharat, Make In India, Bio-Fuels, Digital India, SMART City, AMRUT, Pradhanmantri Urja Ganga Yojana (Pipelines, CGD Networks, Fertilizer Plants), Sagarmala, Renewed focus on Infrastructure especially Ports & Airports, PCPIRs, Namami Gange, Affordable Housing, etc is expected to improve FDIs into the country.
ROE and ROCE is around 18% and 29% respectively. Regular dividend paying company and which is around 5% of the CMP.
The construction sector faced various challenges like fluctuation in input prices, cost overruns in the delayed projects and additional working capital requirement arising from delays in realization from clients. The sector is also directly impacted by economic slowdown and regulatory changes have adversely impacted the financial and liquidity profile of players in the industry
Share support zone is around 64. Current Position: Hold. Resistance is 78. Share should be bullish position once it cross 82 level and next target can be 110/120.
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