Engineers India (EIL) the PSU Engineering Project Consultancy & Turnkey major clocked 24% earnings growth for the quarter ended December 2011 to Rs 151.26 crore on a sales of Rs 792.50 crore, which was higher by strong 17%. But operating profit was higher by 16% to Rs 182.24 crore facilitated largely by higher sales as operating margin contracted by 20 bps to 23%. However gained by higher other income (up 36%), lower depreciation and lower tax incidence the net profit was higher by 24% to Rs 151.26 crore.

• Upside in revenue is on account of double digit growth in both Lumpsum Turnkey Projects (LTP) as well as Consultancy & Engineering Projects (C&EP). The segment revenue of LTP was higher by 20% to Rs 469.23 crore and that of C&EP was up by 13% to Rs 323.27 crore. Strong upside in LTP business is largely on account of accelerated burnout of order book and good show by C&EP is largely on account recent order wins which started contributing to topline.
• Operating margin for the quarter was at 23% which almost flat (down just 20 bps) compared to 23.2% margin in corresponding previous period. This is largely due to near identical contribution to topline from both LTP and C&EP unlike earlier sequential quarters where the contribution of low margin LTP was more compared to C&EP. Contribution of C&EP to topline was 41% in Q3FY12 compared to 42% in the corresponding previous period. Similarly the contribution of LTP to topline stood at 59% compared to 58% in Q3FY11.
• The segment margin of LTP stood increased by 110 bps to 10.3% for the quarter but that of C&EP at 45% was down by 170 bps. Thus the growth at segment profit of C&EP restricted to 9% to Rs 145.54 crore despite double digit revenue growth. On the other hand the segment profit of LTP was higher by 34% to Rs 48.12 crore on the back of higher sales and margin expansion.
• Other income for the quarter was higher by 36% to Rs 44.43 crore on the back of higher return on surplus cash given the fact of higher interest rates on yoy basis. Interest cost for the quarter as well as corresponding previous period was nil. The depreciation was lower by 33% to Rs 2.81 crore. Thus the PBT before EO was higher by 20% to Rs 223.86 crore. The EO for the quarter as well as corresponding previous period was nil. The tax incidence was marginally lower at 32.5% compared to 34.0% and in absolute terms it was higher by 15% to Rs 72.76 crore. Thus the PAT was higher by 23% to Rs 151.10 crore.
• Earlier year tax written back was Rs 0.16 crore compared to a short provision of Rs 0.24 crore in the corresponding previous period. Thus the net profit was up by 24% to Rs 151.26 crore.

Nine month performance

The standalone sales for the period was higher by 32% to Rs 2473.52 crore. However as OPM contracted by 280 bps to 21.2%, the growth at operating profit was limited to 17% to Rs 524.76 crore. The PBT was higher by 22% to Rs 656.26 crore spurred by higher other income (up 45% to Rs 140.17 crore) and lower depreciation (down 16% to Rs 8.66 crore). But with taxation higher by 18% (to Rs 210.44 crore) in absolute terms, the PAT was higher by 25% to Rs 445.82 crore.

Other developments

To pay interim dividend of Rs 2 per equity share (or @ 40% ) of Rs 5 face value.

The stock hovers around Rs 265.90.

Engineers India: Results

Engineers India: Segment results