Incorporated nearly a half century back, Engineers India (EIL) started providing engineering services to the oil and gas sector before branching out to infrastructure and fertilizer industry. Its engineering staff strength of over 3000 puts it ahead of its peers. EIL has earned an average ROCE of 40 per cent in the last five years. Return on Assets (ROA) has averaged 27 per cent in the last five years and trending higher (40 per cent in FY11). Focus on lump-sum turnkey EPC projects has helped EIL post an annual revenue growth of 22 per cent since FY08 - putting its run rate even ahead of industry behemoth L&T’s.
The company’s high cash holding (`21 billion) as of September 2011 provides it with an advantage its competitors don’t have. But EIL operates in a sector that is undergoing a lot of pain. The drag on the sector not left EIL untouched. The stock trades at a 5 year PEG of 0.54. Buy.
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