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Strong Q2; further execution ramp up on cards

Quick Pointers:

* EIL has increased its FY26 revenue growth guidance to ~25%+ with Consultancy/LSTK EBIT margins of ~25%/7% in FY26.

* H1FY26 order intake was Rs37.6bn while management expect to surpass ~Rs80bn in FY26.

Engineers India (EIL) posted a strong quarter with 33.7% YoY revenue growth and a 13bps YoY improvement in EBITDA margin to 9.2% while Rs256mn loss from JVs/associates dragged down consolidated PAT. Supported by a sustained execution ramp-up, management has raised its FY26 revenue growth guidance to over 25% and remains confident of surpassing ~Rs80bn in order inflows, driven largely by strong momentum in the international consultancy segment. Domestically, despite some tariff-related softness, the outlook remains healthy with key opportunities such as the Paradeep expansion, Andhra Refinery, and IOCL’s specialty chemicals project in the pipeline. The stabilization issues at Ramagundam have been resolved, and profitability is expected to improve, aided by tailwinds from India’s urea shortfall. Management is also pursuing diversification opportunities across coal gasification, green hydrogen, and bio-refinery projects, which are expected to open new growth avenues.

We believe EIL’s long-term growth prospects remain intact given 1) strong order book prospects in non-oil & gas and oil & gas projects 2) Strong traction in overseas consultancy business from Middle East & Africa region 3) opportunities in energy transition & infrastructure, and 4) lean balance sheet. The stock is currently trading at a PE of 15.9x/13.4x on FY27/28E. We roll forward to Sep’27E and maintain our ‘Buy’ rating valuing the Consultancy/Turnkey segments at a PE of 22x/10x Sep’27E (22x/10x Mar’27E earlier) arriving at a SoTP-derived TP of Rs255 (Rs245 earlier).

Strong turnkey revenue growth (+66.7% YoY to Rs4.9bn) boosted top line: Consol. revenue increased by 33.7% YoY to Rs9.2bn (PLe: Rs9.0bn) driven by increase in Turnkey revenue (+66.7% YoY to Rs4.9bn) and Consultancy revenue (+9.3% YoY to Rs4.3bn). Adj. EBITDA grew 35.6% YoY to Rs846mn (PLe: Rs899mn) while EBITDA margin improved by 13bps YoY to 9.2% driven by better operating leverage. NOTE: We have added back settlement of performance obligation amounting to Rs352mn in other expenses resulting in comparable EBITDA. Adj. PBT grew by 11.8% YoY to Rs1.1bn (PLe: Rs1.2bn) driven by better operating performance despite lower other income (-21.5% YoY to Rs369mn). Adj. PAT (ex. JVs/associates) increased by 7.6% YoY to Rs828mn (PLe: Rs858mn).

Healthy order book stands at Rs131.3bn: Q2FY26 order inflow came in at Rs23.3bn (-15.3% YoY against higher base). Order book stands at Rs131.3bn (3.7x TTM revenue), with Consultancy Domestic/Consultancy Overseas/Turnkey mix of 34%/25%/41%.

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