ENGINERSIN - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 05 Nov 25, 7:43 am

Fundamental Rating: 3.9

📊 Financial Overview: Engineers India Ltd (ENGINERSIN) maintains a solid financial foundation with a market cap of ₹11,306 Cr and an exceptionally low debt-to-equity ratio of 0.01. The company boasts strong return metrics with a ROCE of 24.4% and ROE of 18.4%. However, quarterly PAT dropped significantly from ₹243 Cr to ₹70.1 Cr, indicating a sharp decline in profitability.

💹 Valuation Metrics: The stock trades at a P/E of 23.5, slightly above the industry average of 22.1, suggesting fair valuation. With a Book Value of ₹46.6, the P/B ratio is ~4.3. The PEG ratio of 2.33 implies moderate overvaluation relative to growth. Dividend yield stands at a healthy 1.94%, appealing to income-seeking investors.

🏭 Business Model & Competitive Advantage: Engineers India Ltd is a leading engineering consultancy and EPC company serving the oil & gas, petrochemical, and infrastructure sectors. Its government backing and long-standing client relationships offer stability and credibility, though it faces cyclical risks tied to capital expenditure trends in its served industries.

📈 Technical Indicators: RSI at 57.2 suggests neutral-to-bullish momentum. MACD at -0.28 indicates mild bearish divergence. The stock is hovering near its 50 DMA (₹203) and 200 DMA (₹202), showing consolidation. Volume spike above weekly average may hint at accumulation.

🎯 Entry Zone: A good entry point lies between ₹180–₹190, offering a better margin of safety below moving averages and closer to support zones.

🕰️ Long-Term Holding Guidance: Engineers India is suitable for long-term holding due to its strong balance sheet, consistent dividend payouts, and strategic role in national infrastructure. However, earnings volatility and valuation caution warrant staggered accumulation.

✅ Positive

• Strong ROCE (24.4%) and ROE (18.4%) reflect efficient capital deployment.
• Debt-to-equity ratio of 0.01 ensures financial stability.
• Healthy dividend yield of 1.94% supports passive income.
• EPS of ₹8.55 indicates consistent earnings generation.

⚠️ Limitation

• Significant drop in quarterly PAT from ₹243 Cr to ₹70.1 Cr.
• PEG ratio of 2.33 suggests moderate overvaluation.
• Decline in both FII (-0.13%) and DII (-0.56%) holdings.

📉 Company Negative News

• Sharp quarterly profit decline may reflect project delays or margin compression.
• Reduced institutional holdings could signal cautious sentiment.

📈 Company Positive News

• Strong historical operating margins and consistent dividend payouts.
• Government contracts and infrastructure push may boost future order book.

🏭 Industry

• Engineering and EPC sector benefits from infrastructure and energy investments.
• Industry P/E of 22.1 suggests moderate valuation across peers.

🧾 Conclusion

• Engineers India Ltd is fundamentally sound with strong returns and low debt.
• Valuation is fair but earnings volatility warrants caution.
• Ideal for long-term investors seeking dividend stability and infrastructure exposure.

Sources: ET Money Financials, Invest Yadnya Analysis, StockAnalysis Ratios

ET Money

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