ENGINEERS INDIA LIMITED
Know the Company
Engineers India Limited (EIL), established in 1965, is a ‘Navratna’ public-sector undertaking of the Government of India under the Ministry of Petroleum and Natural Gas, to provide engineering and related technical services for petroleum refineries and other industrial projects. As of 31 March 2024, the Government of India holds a 51.32% stake in the company.
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EIL offers a wide range of services including conceptual design, detailed engineering, procurement, construction management, as well as project management. These services cater to the industries of hydrocarbons, petrochemicals, fertilizers, metallurgy, ports & terminals, and other sectors of industry. Additionally, EIL undertakes lump-sum turnkey projects, offering comprehensive project solutions from concept to commissioning. The company is also involved in projects focused on green energy, water treatment and environmental protection.
EIL has an R&D center recognized by the Department of Scientific & Industrial Research (DSIR), highlighting its commitment to research and development in various engineering fields. As of March 2023, the company holds 35 patents.
Strengths
EIL is a leading global Engineering Consultancy & EPC Company offering Total Energy Solutions with six decades of experience on landmark projects with global energy majors across entire Oil & Gas value chain. During the past six decades, the Company diversified into other sectors including Fertilizer and LNG, Ferrous & Non-ferrous Metallurgy, Infrastructure, Strategic Crude Oil Storage, Water & Waste Water Management, Ports & Harbours, Coal gasification, Bio-fuels/Green Ammonia/Green Hydrogen, etc. In addition to its presence in the domestic market, EIL has expanded its footprint in the Middle East, Africa, South and Central Asia, and Latin America.
Expertise in the execution of large projects
EIL is India’s prominent engineering consultancy company and has been involved in shaping the national energy infrastructure for almost past six decades. The Company has participated in the establishment and expansion of almost all major refineries in India and has been instrumental in developing petrochemical complexes.
The company’s core business is the implementation of mega projects in the oil and gas sector. EIL’s recent mega project implementation in the domestic market includes Hindustan Petroleum Corporation’s (HPCL) Vizag Refinery Modernisation Project, HPCL Rajasthan Refinery Project, IOCL-Panipat Refinery’s capacity expansion project, and Chennai Petroleum Corporation’s Cauvery Basin Refinery project, with a combined capital outlay of around $20 billion. Notably, EIL has completed one of the largest petrochemical integration projects for HPCL Mittal Energy Limited (HMEL), with a capital cost of approximately $3 billion. In the petrochemical sector, EIL is also implementing India’s first Propane Dehydrogenation-Polypropylene (PDH-PP) unit for GAIL. These multibillion-dollar projects clearly demonstrate EIL’s strong domestic presence as well as execution expertise in the oil & gas sector.
The Company’s global presence spans across in the Middle East, Africa, and Southeast Asia. The biggest boost to the company’s international footprint came from securing two major assignments, including one valued at $22 million for providing consultancy services for an Integrated Natural Gas Liquids plant and a 300 MW CCTG Power plant in Guyana, and another significant project for rendering EPCM services for grassroots, a world-scale fertilizer complex in Nigeria. EIL has notably broadened its business horizons into new territories, such as the Dangote Oil Refinery Project (DORC) in Nigeria, with a total capital outlay nearing $20 billion, featuring the highest single train refining capacity globally. Additionally, the company is delivering Project Management Consultancy (PMC) services for the 1.5 MMTPA Mongol Refinery project in Mongolia, funded through a Line of Credit (LoC) from the Government of India. This endeavour underscores EIL’s capacity in executing projects amid adverse climates and navigating challenging global business landscapes.
EIL has been instrumental in spearheading the nationwide natural gas pipeline network as part of the Urja Ganga Pipeline Project initiated by the Government of India. This initiative aims to bolster the contribution of natural gas in the country’s energy portfolio, aiming to raise its current share of approximately 6% to 15% by the year 2030.
Entry in to Emerging Sectors
EIL has been broadening its portfolio by venturing into emerging sectors like Renewable Energy and Waste Management. The company places a strong emphasis on research and development to remain at the forefront of innovative solutions and technological advancements. Furthermore, EIL has extended its reach beyond its traditional focus on oil and gas to encompass petrochemicals, green hydrogen, fertilizers, and biofuels.
Engineers India Ltd has entered into a preliminary agreement with Australia’s Sunrise CSP group to collaborate on energy projects both in India and overseas. This agreement is set to establish an exclusive partnership focusing on concentrated solar thermal power for oil and gas, along with other energy ventures.
The company is actively pursuing petrochemical projects, capitalizing on the substantial growth observed in the petrochemical sector. With notable advancements in petrochemicals in India and numerous projects in the polymer domain, there’s a flourishing opportunity available. EIL is engaged in ongoing discussions with several petrochemical giants to partake in these ventures. Renowned globally for implementing large-scale cracker complexes, EIL maintains a leading position in the consulting realm. Additionally, the company expresses interest in forthcoming projects within the green hydrogen and green ammonia sectors.
EIL’s engineering team is leading the charge in furthering innovation and research to promote the localization of the oil & gas sector and pave the way for India’s Energy Self-Reliance. Collaborating with esteemed industry bodies and academia, the company is spearheading the development of state-of-the-art process technologies. These include Sulphur Recovery Units, Diesel Hydrotreating technology, Solvent Dewaxing Deoiling technology, Desalter technology, and other cutting-edge advancements.
Strong Order Backlog
As of the current financial year, EIL’s order book stands at approximately Rs 8,400 crore, reflecting steady growth from the Rs 7,700 crore recorded in FY23. the company is actively enhancing its orders from private entities, with around 70 percent of the current order book attributed to projects from public players, while the remaining 30 percent comes from private players.
Financials
Engineers India reported net profit for the Q3FY2024 at Rs 63 crore as against Rs 16 crore posted in Q3 FY23. Revenue from operation for the same period stood at Rs 868 crore, up 3% from Rs 842 crore. The company’s revenue from Consultancy & Engineering Projects was at Rs 370 crore, up 2.37% YoY and income from Turnkey Projects was at Rs 497 crore, up 3.52% YoY. For 9M FY24, EIL’s consolidated net profit soared 111% (YoY) to Rs 330 crore. Revenue grew marginally to Rs 2476 crore in 9M FY24 from Rs 2450 crore reported in 9M FY23.
EIL has a strong balance sheet with zero debt in its books, having track record of healthy earnings and consistent dividend payout.
Bright Outlook
The government’s ambitious target is to double the net area explored for oil and gas to 500,000 sq. km by 2025-26, with an expected investment of approximately Rs 4.7 Lac Crores is a boon for the Company. In the midstream sector, an investment of around Rs 70,000 Crores is projected to expand the gas pipeline network nationwide. Furthermore, plans are underway to enhance the oil pipeline network by an additional 12,000 Km, supplementing the existing 32,908 Km. EIL places significant emphasis on offshore and onshore projects, as well as pipeline projects, actively engaging in discussions that provide clear revenue visibility in the near future.
India currently is having a crude oil refining capacity of nearly 252 Million Tonnes, and there are plans to add approximately 190 MMTA of refining capacity over the next decade, requiring an investment of around Rs 4.0 Lakh Crore. The chemical sector in India continues its robust growth, outpacing the GDP by 1.2-1.5 times. In the petrochemical domain, the government is steadfast in reducing massive imports. Flagship programs such as Make in India and the Aatmanirbhar Bharat Abhiyan provide governmental support to these sectors, contributing a strong environment to attract further investment, thus presenting immense growth opportunities for the company.
Risk Factors
As a civil construction and engineering consulting company, Engineers India Ltd. (EIL) is deeply involved in sectors such as oil and gas, petrochemicals, and infrastructure, which are all highly susceptible to economic fluctuations. Prolonged periods of high interest rates situation may adversely affect global economic growth, thereby impacting the business of the company.
A substantial portion of EIL’s projects are government-funded. Changes in government spending priorities or delays in payment can adversely affect cash flow and project timelines for the Company. EIL handles complex EPC projects, which involve significant execution risks. Delays, cost overruns, and technical challenges may lead to financial losses and reputational damage.
Sector: Industrials
Market Price: Rs. 257.70 as on today
FV: Rs 5/-
Stock Name: Engineers India Ltd
BSE Code: 532178, NSE Code: ENGINERSIN
Market Cap.: Rs 15178 Cr
Book Value: Rs. 38.5
Segment: Civil Construction
Incorporation: 1965
Headquarters: New Delhi
