Strong consultancy momentum & global expansion supports quality growth ahead…
About the stock: Engineers India (EIL), established in 1965, is an Indian public sector Navratna company, primarily present into two segments – Engineering Consultancy and LSTK (Lump Sum Turnkey). EIL’s business operations span the hydrocarbon value chain as well as diversified areas of Metallurgy, Infrastructure, Bio Fuels & Green Hydrogen. The company is also present in international markets such as Middle East, Africa, South Asia & Central Asia
• In FY26, consultancy and turnkey segments (LSTK) contributed 46% & 54% to total revenues respectively Q4FY26 Performance: EIL reported a healthy Q4FY26 performance with revenue at ₹898.7 crore, up 4.2% YoY, & down 7.1% QoQ. EBITDA grew sharply by 39.9% YoY to ₹138.4 crore, with EBITDA margin improving to 15.4% vs 11.5% in Q4FY25, driven by better operating leverage and efficiency gains. PAT more than tripled YoY to ₹152 crore (+212% YoY, +102% QoQ), reflecting strong profitability improvement. FY26 Consultancy & Engineering Projects (CEP) revenue grew 6.1% YoY to ₹1,782.0 crore against ₹1,678.8 crore in FY25, supported by healthy consultancy execution across hydrocarbons and energy transition projects. Turnkey business delivered strong reported growth during FY26. Revenue surged 52.4% YoY to ₹2,067.8 crore compared to ₹1,349.6 crore in FY25, supported by one time gain in Q3FY26.
Investment Rationale:
• Robust order backlog driving multi-year earnings visibility: EIL ended FY26 with record order book of ~₹15,109 crore (+29% YoY) led by strong consultancy inflows (~₹6010 crore) and large international wins including Dangote projects, providing healthy execution visibility over the next 3-5 years. Management expects FY27 revenue growth of ~10-15% with consultancy business likely sustaining 15-20% growth trajectory, supported by execution ramp-up of recently secured mega projects and healthy domestic hydrocarbon capex pipeline including Paradip, refinery expansions and coal gasification opportunities. We expect revenues and PAT to grow at CAGR of ~16.2% and 17.8% over FY26-FY28E and EBITDA margins are also expected to expand from 9.1% to 16.2% over FY24-FY28E given consultancy forms ~72% of backlog.
• Strong consultancy-led order book expansion to drive profitable growth: EIL reported order book of ~₹15,109 crore, with consultancy order book crossing ~₹10,000 crore, reflecting a meaningful shift towards higher- margin business mix. Increasing contribution from consultancy and PMC assignments is likely to support margin expansion and improve earnings quality, given consultancy margins remain structurally superior at 20-25% vs 5-7% in LSTK business. EIL’s strong FY26 order inflow (~₹8,000 crore) alongside guidance to sustain similar inflows in FY27 provides healthy execution visibility.
Rating and Target Price
• We remain constructive on the company given reasonable valuations and strong growth viability and a leverage free balance sheet. We recommend BUY on EIL with a target price of ₹ 315 per share (based on 20x FY28E EPS)
