Engineers India Limited (ENGINERSIN.BO) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Engineers India Limited Q1 FY '26 Earnings Conference Call hosted by DAM Capital Advisors Limited. [Operator Instructions] Please note that this conference is being recorded. I will now hand the conference over to Ms. Bhoomika Nair from DAM Capital Advisors Limited for opening remarks. Thank you, and over to you.

Thanks. Good morning, everyone, and a warm welcome to the Q1 FY '26 Earnings Call of Engineers India Limited. From the management today, we have Mr. Sanjay Jindal, Director of Finance; Mr. Suvendu Padhi, Company Secretary and Investor Relations; Mr. R.P. Batra, Executive Director, Finance and Accounts and Investor Relations; Mr. Amanpreet Singh Chopra, Senior General Manager, CMD Office and IR; Mr. Vivek Midha, Senior General Manager, Marketing, BD and IR; and Ms. Neha Narula, Senior Manager, Company Secretary and IR. At this point, I'll hand over the floor to Mr. Jindal for his initial remarks, post which we'll open up the floor for Q&A. Thank you, and over to you, sir.

Thank you, Ms. Bhoomika. Good morning, everybody. We have declared our financial results for the first quarter ended 30th June 2025 on 13 August 2025. Company order book position has reached its all-time high and stands at INR 12,145 crores as on 30th June 2025 as compared to INR 11,717 crores as on 31st March 2025. Order inflow in EIL during the first quarter of financial year '25-'26 stands at INR 1,430 crores, which comprises INR 609 crores in Consultancy segment and INR 821 crores in Turnkey segment. In the first quarter of financial year '25-'26, the company achieved a turnover of INR 857 crores in comparison to INR 611 crores in the first quarter of financial year '24-'25 showing an increase of around 40% with turnover from Consultancy & Engineering segment amounting to INR 408 crores and INR 449 crores in Turnkey segment. During the first quarter ended 30th June 2025, the company recorded profit before tax of INR 94 crores and profit after tax of INR 70 crores in comparison to INR 74 crores and INR 55 crores, respectively, during the first quarter of financial year '24-'25, showing an increase of 27% approximately in the PBT and PAT. Operating margin during the first quarter of financial year '25-'26 stood at around 7%, that is INR 59 crores as compared to 6%, that is INR 36 crores during the quarter ended June 2024. EBITDA of the company as on 30 June 2025 stood at INR 105 crores. EBITDA margin is 12% in comparison to INR 85 crores as on 30 June 2024. The company is maintaining a healthy earnings per share of INR 1.25 during the quarter ended June 2025 as compared to earnings per share of INR 0.97 during the June quarter 2024. On a consolidated basis, the company earned a profit of INR 65 crores for the quarter ended 30th June 2025. Now it's to Bhoomika ji.

[Operator Instructions] The first question comes from the line of Mohit Kumar from ICICI Securities.

Sir, first question is, in this particular quarter, we have reported losses on JV joint venture. Can you please help us explain the losses and the likelihood of returning to profit from next quarter?

Yes. Actually, in this first quarter, RFCL project was under shutdown for the normal shutdown of the project. And it was shut down almost 45 days out of 90 days. And now this project -- this project is doing well, and it is already working at more than 90% capacity. And we are sure that in this quarter, we'll have profit.

Understood, sir. My second question is, sir, on this particular quarter, we have reported around 17% EBIT for the consultancy. Is it fair to assume that we will report -- we should take in our model 22% EBIT margin going forward? Is that a fair assumption?

I think this is a fair assumption on a year-to-year basis, we are having around 22% margin in the EPCM business, Consultancy job.

Understood, sir. And given the very strong order book of the Consultancy, is it fair to expect a 20% growth in the top line from Consultancy for the next 2, 3 years? Or do you think the growth will be slightly lower.

You're asking about the growth?

Yes, given the very strong order book on the Consultancy, it's around 4.4x. Is it fair to assume a 20% growth in the top line for the next few years?

For the Consultancy business, it will be in the range of 12% to 15%.

Not higher than that, sir, given that very strong order book?

Some portion will come from the turnkey business also. So overall basis, it is 20%. And out of that 20%, around 12% to 15% from the consultancy business because Consultancy business is more profitable to EIL.

The next question comes from the line of Amit Anwani from PL Capital.

So first question, again to the previous answer. You're saying 20% top line growth out of which 12% to 15% Consultancy. Does it mean that we are expecting more than 50% contribution from Turnkey for FY '26?

Normally, it remains in the same range, somewhere Consultancy will be around 60%, 55%, 60%, then 40%, 45%. Yes, it was around 52% in this quarter. LSTK was -- Consultancy was around -- no, sorry, LSTK was around 52% in this quarter and consultancy was around 48%. So normally, it remains somewhere around the same figure. I mean it could be 55% Consultancy and 40%, 45% Turnkey. So normally, it remains in the same.

Yes. Basically, overall growth, we are expecting around 15%. It will be coming from both the segments, Turnkey as well as the Consultancy segment. You see our now estimate. Going forward, we can revise the estimate based on the execution.

Right, sir. And second question, again, on Consultancy. We have been doing very good from past 2 quarters and even the overseas Consultancy is seeing good conversions. So I wanted to understand, are we expecting same run rate? And we were talking about some setups in Middle East. So what is the guidance? We'll be continuing this run rate of order inflow from Consultancy, which we have done in past 2 quarters for the remaining quarters?

International, yes, that's true that International has been giving good business to us, primarily from the Middle East and Abu Dhabi. As of today, we have already reached INR 960 crores from the -- in the Overseas segment in the current -- as of today, we have secured business with INR 960 crores. So we see more opportunities in the International segment only. So it is going to grow.

Understood. Sir, is it fair to assume since we saw Consultancy margins kind of keeping low this quarter and last year, we saw it is scaling up by the end of 4Q. So are we expecting kind of 25% what we did last year on margins for Consultancy? That is the last question.

Yes. In the last quarter, there were certain items, basically settlement of change orders and the write-back of provision. So going forward, the margins, basically segment margin shall be in the range of around -- between 20% to 25%. And in case a particular project is being completed, in case there is some variation order, the quarter-to-quarter, there may be a variation. But on an overall basis, basically, we are expecting the Consultancy segment margin in the range of between 20% to 25%.

Basically, in the last quarter, there was impact of INR 195 crores due to change order. That's why our quarter performance was extraordinary.

So is there any change order expected this year also?

Definitely, we are having change order with our clients and that are under processing with the clients. And it depends on the time when it materialized. And definitely, it will materialize in this year also. It's a continuous process.

We take the next question from the line of Vivek Gautam from GS Investment.

Yes. Just wanted to understand -- sorry, I was late in joining the call, sir. Just wanted to know what was the reason for the downturn in the profit? Was it due to the losses in our JV, Ramagundam and other sort of things? What value are we getting by going in for such JVs? And is it a government pressure?

No, no. Actually, our RFCL project is going well. And you have seen in the last year, there was good profit from the RFCL project. But in this quarter, RFCL project was under planned shutdown for planned shutdown. And out of 90 days, it was under shutdown for 45 days. That's why there is some figure of losses. But it will be get covered in this quarter because plant is already running on good capacity at good capacity. So we are definitely sure in this year, we will have good profit from the RFCL project.

What about other JV, sir?

I'm talking about the RFCL JV?

No, some other JVs also we are having.

No, we don't have other JVs.

Okay. The second thing is Madam CMD, is she retiring this year and by when? Because her tenure was...

She is retiring on Feb '25. It is scheduled. It is super annuity.

Superannuation, that is again under of PSU that you have to compulsory retire at the age of 60 unlike private sector. So any chance of her extension, there has been no precedent of that sort in the past for EILCMD...

We can't say anything on this aspect.

Okay. Okay, sir. And basically, how is the future looking like for us? For the first time, there was in the March quarter, there was a good uptick in the top line and bottom line also. So we had moved away from oil and gas sector to the other sectors also. Was that the reason? So is that sustainable? And is it margin accretive?

Yes, the future is still bright, and we are working towards it. If you see that we have already reached to the order book of INR 12,000 crores as of now in this quarter itself. So we have added more orders to the tune of right now, we have around INR 2,700 crores already as of today. So we are hopeful that we get more orders and we beat the last year's record and let's hope for the best.

And in Guana, has been the major oil discovery and there is an Indian [indiscernible] , Indian politician, Mr. Ashraf Ali is the President and have we been able to get any breakthrough in Guyana? And also any update on the Andhmad prospects, sir, which can be good for us or the country also on the long term, sir?

With respect to Guyana, we are in the power plant project as a project management consultant. Primarily, it's an exploration thing when the oil will come out and they want to process it, then our goal will initially come. So let's hope for the best because what process they follow because ExxonMobil is the major contributor there and who's into the exploration. So let's hope for the best. And with respect to the Andhmad, this is still in the initial nascent stage. Let's hope when the actual reserves are there and explored and then processed. So future is bright for India if we get this reserve from Andhmads and some work from Guyana. So let's hope for the best.

Indian sedimentary this is as far as the oil discovery goes, not much of a success has been so far. Anything changing which you are finding and as you being from the same sector, sir?

I would not be able to comment because that's more of an exploration part. So I think ONGC or oil would be the best to respond on that.

We take the next question from the line of Bhoomika Nair from DAM Capital Advisors Limited.

Sir, you talked about the international pipeline. Can you please discuss and give some outlook in the domestic market? What is the outlook in terms of the ordering activity that you are seeing? If you can just highlight that for larger projects on both petchem and refinery?

You are aware that this Andhra project is going to come. So we are working on that as in the -- we have been given a work for selecting the licensor and finalization of the configuration. So that's one of the prospective projects, which is going to come towards the end of this financial year. That's one of the opportunities as well as there are certain more projects under consideration, which we are discussing. A lot of opportunities are there in the infrastructure segment also, like we have got various assignments from the data center, institutional buildings as well as various religious places modifications. So those opportunities have also come to us in the domestic segment. Some work has also come in the metallurgical segment, and we are anticipating some of the expansion projects, which could come with respect to the state smelters. So...

On the IOCL side, sir, any petchem projects, anything which is anticipated?

See, petchem is already on. [indiscernible] Petrochemical is on. Its Phase 1 is already on. When the Phase 1 completes, they will go for the Phase 2. So that's the major opportunity which will be coming to us because that's already awarded to us, but formally, Phase 2 would be awarded when the Phase 1 is complete. So that's there. That's the major petchem projects from the IOCL side as of now.

But when is the Phase 1 expected to be completed, sir?

It will take a couple of more months. It almost it was a 10-month schedule. 4, 5 -- 3, 4 months have expired. So let's see.

Okay. And anything on the HPCL side, you spoke about BPCL Andhra. Anything else on any other projects of BP or HP.

With respect to the HPCL, the logs was there and some modification in the log project is there. And some of the projects are there on the unveil from their side. HPCL, I do not have much details immediately in my hand right now. So I'll get back to you on that.

Sure. Okay. Secondly, on this, in the presentation, you've spoken about the various orders that you've got. Just wanted to clarify what is the difference between depository and LSTK OBE that we typically used to give earlier? If you can just explain, sir? Order profile different in the workings or in terms of cost pass-through, et cetera?

No, it is exactly different. This is considered as part of LSTK. LSTK we are completely responsible for execution of the project and all the risks are taken under our purview because we work as an EPC contractor and we are responsible for execution of the project and delivering the project. Whereas in the mode, it's a mode of execution where we take the cost part, ordering cost in our principal executor. So that's the basically difference. But primarily, it is considered as part of consultancy only, while LSTK deposit is considered as a part of consultancy, while the LSTK is purely an execution work. So that is considered as a step under the different purview altogether.

Understood. Understood. Fair point. Lastly, sir, you mentioned that the international order intake is around INR 950 crores till date. And I see in 1Q, we've got INR 475 crores. So where has the balance close to INR 475 crores kind of come from? If you can just highlight that?

It has come from Abu Dhabi and one of the few of the projects have come from Kuwait, [indiscernible] Joint operations. So we have got one assignment from there and rest of them have come from the Abu Dhabi, UAE.

The next question comes from the line of Nidhi Shah from ICICI Securities.

Sir, you mentioned on the IOCL Paradip Phase 2 will be awarded after Phase 1. Is there anything remaining in Phase 1 to be awarded still?

[indiscernible] [Technical Difficulty]

So my question is basically on the IOCL Paradip Phase 1. Is there anything that is pending to be awarded?

For the Phase 1, the Phase 1 part is already awarded. It's already under the execution. As part of the Phase 1, we have to prepare a study report as well as feed document for that so that they can proceed with the subsequent phases. So that work is already on. The complete work for the Phase 1 is already awarded to us. Now when this report is submitted, their management will take a decision to go ahead on the project and then the Phase 2 will start.

And so is that fair to assume that Phase 2 will have a larger portion of EPC than the consultancy?

No, it's like there's some portion is on EPCM and some of the portion is on the EPC basis. But for us, it is completely EPCM. It's already been awarded to us.

Also could you please help us with the [indiscernible] position where it is still not in the order book, we are waiting for LOA and some details on those tenders?

There are many of the projects which we keep on bidding and those remains in the process of finalization with the client. So as soon as they are realized, these are considered as part of the order book, and they are cleared in the subsequent quarterly results. So it will be declared. Many things remain in the pipeline. Till the time they are finalized, they cannot be declared because there are competitive scenarios working right now.

But are there any L1 which L1s are just pending to be -- only LOA is remaining in that sense, like the decision has been made finalized, but only the official LOA is -- or is it that the...

Yes. There could be certain smaller orders which are under negotiation and finalization of the contract. But till the time the contract is not signed, it's not necessarily that it's all the competitive tenders. There could be certain negotiated tenders are also there, which are in the process of negotiation and finalization of the contract. So as soon as they are signed, this will be declared. There are a few jobs are there, definitely.

And on the petchem side in the Middle East, are there some projects that you would like to call out that could possibly be tendered in the next 9 months?

No, there are a number of projects which are coming in Middle East, specifically in Saudi Arabia or in UAE or in Kuwait. So we are bidding for those projects, but they have a lead time of 5 to 6 months as soon as the tender is placed. So there is an evaluation time. It all depends how it goes. We have bid a few of the ones. So let's hope for the best.

We take the next question from the line of Saket Kapoor from Kapoor & Company.

Sir, firstly [Foreign Language] announcement for Bharat small modular reactor. If you could just elaborate what kind of opportunity are we eyeing in this space? And if you could give us some more color on that, sir?

So it's like we are working with PCI to work on this conceptual design and engineering services for that project. This work is already awarded to us. So this is going to be the first assignment. So if finally after execution of the same, this will open opportunity for the other kind of assignments because Government of India is planning for a lot of this kind of SMRs all across the India for generation of the electricity and increasing the nuclear reach. So that is a good opportunity. But this assignment is awarded to us, somewhere around -- it is somewhere around INR 30 crores, INR 29 crores, INR 30 crores.

Okay. So it is one which will be a testimony for going ahead once we execute the same.

It's a starting point. It could be the starting point. And then based on the success of this or with this, we can start for the other projects also wherever NPCL works.

Okay. And when are we going to execute the same? How long will it take?

We are working on this. We have already started the study on this.

Sir, in the presentation, there is a mention of business secured and order booking on Slide #10, 11 and 12. So what should investors read into this difference between business secured and order booking? How should one interpret these things, sir?

Business secured is the current business, which is secured in this financial year. And order book will include the orders which have already been executed in the past and they are under execution. Normally, a big order will have a cycle of 3 to 4 years. A big project will have a cycle of 3 to 4 years. So every financial year, some of the unexecuted value will be there in that financial year. So this shows that this much of work is already there in our hands. Like suppose today, we see that INR 12,000 crores, so INR 12,000 crores worth of work is under execution with us. While the business secured tells the new business which we have secured in this financial year.

Correct, sir. In your opening remarks and also to answer to some of the participants, you mentioned about 15% revenue growth on what we did for the last financial year should be what we are looking for the remaining -- for this year, that should be the top line growth that we can expect?

Yes, we are told that it should be around -- for Consultancy, it should be 12% to 15%.

I t should be. It should be. Yes.