'Buy' This Stock For 56% Returns In 1 Year: HDFC Securities

Brokerage firm HDFC Securities has recommended investors to buy Engineers India's stocks with a potential upside of 56.27%, within a target period of 1 year.

Target Price

The Current Market Price (CMP) of Engineers India is Rs. 69.75. The brokerage firm, HDFC Securities has estimated a Target Price for the stock at Rs. 109. Hence the stock is expected to give a 56.27% return, in a Target Period of 1 year.

Stock Outlook
Current Market Price (CMP)	Rs. 69.75
Target Price	Rs. 109
1 year return	56.27%

Company performance

Engineers India's (EIL) Q2FY22 performance was muted due to weak execution in both consultancy and turnkey segments. During the quarter, the company booked two large orders from Chennai Petroleum Corporation Limited (CPCL), Nagapattinam, leading to a total order inflow of Rs. 11.7bn. Execution on HPCL Barmer remained low as LSTK execution during Q2FY22 fell 12.3% YoY to Rs. 3bn. Consultancy execution was also subdued with a muted 1.8% YoY growth to Rs. 3.5bn over a low base.

Comments by HDFC Securities

HDFC thinks the company faced a weak execution but had a stable outlook. According to the brokerage firm, "Factoring in the weak execution and decline in margins, we cut our earnings estimates for FY22E and FY23E by 9% and 6% respectively. However, taking into account the investment in NRL and Ramagundam Fertilisers, and healthy growth prospects, we maintain BUY on the stock with a revised target price of Rs. 109 (previously: Rs. 116)."

About the company

EIL is a leading engineering consultancy and EPC company, delivering world-class projects. Certification Engineers International Ltd. (CEIL) is a wholly-owned subsidiary of EIL. For setting up a gas-based urea plant of capacity 3850 TPD, EIL, National Fertilizers Limited (NFL), and Fertilizer Corporation of India (FCIL) have incorporated RFCL as a Joint Venture Company.

Disclaimer

The above stock was picked from the brokerage report of HDFC Securities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.

(Also read: HDFC Securities Recommends To 'Buy' This Stock For 15% Upside)