Engineers India Limited FPO Review (Apply)

Even when market has seen 21K plus for Sensex for last few months with volatile trades in secondary market, we marked end of CY 2013 with FPO of Power Grid Corporation that generated Rs. 6959 crore and now the beginning of CY 2014 is marked by another FPO of Engineers India Ltd. SME IPOs kept making bee lines during past few months with no main line IPO from any private sector company. This is simply due to prevalence of No Confidence in the reforms of the economy by investor masses.

 As known the company is an engineering consultancy company providing design, engineering, procurement, construction and integrated project management services, principally focused on the oil and gas, petrochemicals, fertilizer and LNG industry segments in India and internationally. It also operate in other sectors including non-ferrous mining and metallurgy, power and infrastructure and is also a primary provider of engineering consultancy services for the GoI’s energy security initiative under its Integrated Energy Policy for strategic crude storages. Its services in these industries and sectors cover the entire spectrum of activities from concept to commissioning of a project that include preparation of project feasibility reports, technology selection, project management, process design, basic and detailed engineering, procurement, inspection, project audit, supply chain management, cost engineering, planning and scheduling, facilitation of statutory and regulatory approvals for Indian projects, construction management and commissioning. The company also provides specialist services such as heat and mass transfer equipment design, environmental engineering services, specialist materials and maintenance services, energy conservation services, plant operation and safety services. EIL also execute projects on a turnkey basis.

 Engineers India Ltd. (EIL) is coming out with FPO that opens for subscription on 06.02.2014 and will close on 10.02.2014. The company is issuing 33693660 equity share of Rs. 5 each within a price band of Rs. 145-150 to mobilize around Rs. 488.5-505.4 crore based on upper and lower price bands.  The offer includes 500000 shares reserved for employees of the company. The issue also offers discount of Rs. 6 per share to retail investors and employees. The issue is lead managed by ICICI Securities Ltd., IDFC Capital Ltd. and Kotak Mahindra Capital Co. Ltd. and Karvy Computershare Pvt. Ltd. is the registrar to the offer. This being dilution of GoI stake, no addition to equity is taking place.

 For last three fiscals, it has posted an average EPS of Rs. 17.33. For nine months ended 31.12.13 it has earned net profit of Rs. 3762.11 crore on a turnover of Rs. 13287.63 crore with an EPS of Rs. 11.17. Its first FPO came in July 2010 when it raised Rs. 977 crore by way of GoI’s stake dilution at a price of RS. 290 per share and was oversubscribed by 13.36 times then.

 EIL closed at Rs 150.30 on BSE, (+ Rs 5.75), or (+3.98 %) on 04.02.14 and has 52-week high of the Rs 223.00 and low of Rs 121.15. Based on the latest BV of the company of Rs 66.41 per share it traded at P/BV of 2.26.