Engineers India FPO – A Value BUY

  • Date – 29th Jan 2016; Issue Period: today, one day only
  • CMP: Rs 194; FPO Floor Pricing: Rs 189/share. Retail gets a 5% discount
  • Mid Cap – Mkt Cap 6500 crores
  • Advice: Investors can BUY with a 2 year perspective

Summary

  • Engineers India is a PSU Mini Ratna engaged in providing engineering and technical services and turnkey projects for the Oil & Gas sector since 1965. It has broadened its activities to related areas. With a HQ in Delhi, company has branches offices in India and abroad.
  • EIL’s growth slowed in the last few years, in line with a slowdown in investments in the sector.
  • However we feel that with the end of the subsidy regime in Indian Oil & gas, and the fall in crude oil prices, the sector is in a turnaround situation. Firms are seeing good refining margins, marginal subsidy issues and robust demand. They are gearing up for capacity and technology upgradation.
  • While revenue and profits at EIL have fallen in 3 years, the share price too fell proportionally.
  • EIL has conservatively preserved cash, built additional capabilities and new growth areas and is poised to recover financially as the sector turns around.
  • Overall Opinion: We feel EIL is a value BUY for investors in this FPO.

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

FPO Offer

  • The FPO floor price is Rs 189 per share; Applicants may apply at this price, or above, or at Cut Off.
  • There is a 5% discount for Retail investors. 20% of the FPO offer is reserved for Retail.
  • Issue date is Feb 29th Jan, 2016 between 9.15 am to 3.30 pm.
  • The govt. has proposed to sell 3.36 cr equity shares (10%) of stake through an offer for sale (OFS). The govt. is selling this to meet its FY16 divestment targets.
  • The OFS could fetch the govt. almost Rs.635 cr, based on the pricing announced today.
  • P/E as on 27th Jan, 2016 closing price is 23.5 times, which appears high.

READ AND DOWNLOAD THE ENTIRE REPORT

Here is a note on the EIL FPO in PDF format.

JAINMATRIX INVESTMENTS_ENGINEERS INDIA FPO_JAN 2016

Right Click the link above to open/ download the PDF document.

Past Report on EIL 

We have also analysed EIL in the past, see our old report from 2014.

Engineers India FPO 2014

JAINMATRIX KNOWLEDGE BASE 

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DISCLAIMER

This document has been prepared by JainMatrix Investments Bangalore (JM), and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JM. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JM has not independently verified the accuracy or completeness of the same. Punit Jain has a small holding in EIL since Feb 2014. Other than this, JM has no known financial interests in EIL or any related firm. Neither JM nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any equity investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from an independent expert/advisor. Punit Jain has applied for certification under SEBI (Research Analysts) Regulations, 2014. Any questions should be directed to the director of JainMatrix Investments at punit.jain@jainmatrix.com

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