Engineers India FPO – Buy

FPO Update 27th Feb

  • The FPO sailed through finally with a subscription of 2.83 times the offering.
  • This was good enough for the firm to price the FPO issued shares at 150. For Retail post discount, it is Rs 144.
  • As a result a Retail investor who had applied for the maximum number of shares still got only 36% of applied number.
  • The shares were deposited into demat accounts over 21-24th. On 25th Tuesday we saw the share price dip to a low of 145.5, and 4% by price by EoD. As expected volumes went up, and a lot of FPO allotted shares changed hands.
  • The next day, the share recovered by almost 3% to 151.4.
  • My reading is that there is demand for the share and it should rise steadily from here.
  • The Q4 results for EIL may be interesting. Typically the firm has a good last quarter as most of the clients are also PSUs. FY13 was an exception, and it was a bad year for EIL. This should change this year.

Good luck and happy investing.

JM - JainMatrix Investments

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  • Report Date 11-Feb-2013
  • CMP: Rs 151
  • Mid Cap – with Mkt Cap of 5,113 crores
  • Pricing: Rs 145-150 range, Retail gets an additional Rs 6 discount
  • Issue Period: 6-12 Feb 2014
  • Advice: Buy

Here is a note on the Engineers India Ltd  FPO (EIL).

Introduction

  • EIL is a PSU engaged in engineering consultancy and turnkey implementation of petrochemical projects.
  • Its turnover in FY13 was 2,529 crores, with profits at 632 cr. Market Cap today is 5,113 cr, at CMP 151.
  • It has 2,890 employees. The focus was Oil and Gas projects, but EIL is diversifying into new sectors like Fertilizer and LNG, Non-ferrous metallurgy, Infrastructure and Nuclear and solar energy.
  • The Delhi based firm is expanding from mostly Indian projects, to execution in MENA (middle east North Africa) and South East Asia. Additionally, offices in London, Milan and Shanghai are for international procurement and marketing.
  • The divestment of 10% of EIL…

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