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

Ladies and gentlemen, good day, and welcome to the EIL, Engineers India Limited Q2 FY '26 Earnings Conference Call hosted by DAM Capital Advisors Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Bhoomika Nair. Thank you, and over to you, ma'am.

Good evening, everyone. On behalf of DAM Capital, I welcome you to the Q2 FY '26 Earnings Call of Engineers India Limited. We have the call today being represented by Mr. Sanjay Jindal, Director of Finance; Mr. Suvendu Padhi, Company Secretary and Investor Relations; Mr. R.P. Batra, Executive Director, Finance and Accounts and IR; 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 evening, everybody, and a warm welcome to all the investors who are attending the investors call. We have declared our financial results for the second quarter ended 30th September 2025 today. Our order book status has reached its all-time high and stands at INR 13,131 crores as on 30th September 2025 as compared to INR 12,145 crores as on 30th June 2025. Order inflow in EIL up to second quarter of financial year '25-'26 stands at INR 3,765 crores. We have declared results of quarter and half year ended September 2025 on 14th November 2025. As regards to financial performance for 3 months ended September '25, the company has registered turnover of INR 900 crores vis-a-vis INR 676 crores in the second quarter of the financial year '24-'25. Turnover from Consultancy and Engineering segment stood at INR 411 crores and from turnkey segment at INR 489 crores. During the current quarter ended September '25, the company has recorded profit before tax of INR 150 crores and PAT of INR 115 crores in comparison to INR 100 crores and INR 79 crores, respectively, during the second quarter of financial year '24-'25, showing an increase of 50% in the profit before tax and around 45% in the PAT. Notably, EPS for the quarter ended September '25 stood at INR 2.4 vis-a-vis September '24 INR 1.41. Operating margin during the second quarter of financial year '25-'26 stood at around INR 102 crores, that is 11.3% vis-a-vis INR 47 crores, that is 7% during the second quarter of '24-'25. EBITDA, including other income of the company during second quarter '25 stood at around INR 160 crores. EBITDA margin is 17% in comparison to INR 110 crores EBITDA margin 15% during the second quarter '24. In the first year '25-'26, the company achieved a turnover of INR 1,757 crores in comparison to INR 1,287 crores in the first half year of '24-'25, showing an increase of around 37% with turnover from Consultancy and Engineering segment amounting to INR 819 crores and INR 938 crores in Turnkey segment. For the half year ended 30th September 2025, the company recorded profit before tax of INR 243 crores and profit after tax of INR 185 crores in comparison to INR 174 crores and INR 134 crores, respectively, for the half year ended 30th September 2024, showing an increase of 40% in PBT and around 38% PAT. Operating margin first half of financial year '25-'26 stood at around 9.3%. EBITDA, including other income of the company for the first half year ended 30th September 2025 stood at around INR 265 crores. EBITDA margin is 14% in comparison to INR 194 crores for the first half year ended 30th September 2024. The company is maintaining a healthy EPS of INR 3.29 for the first half year ended 30th September 2025. On the consolidated front, the company earned a profit of INR 83 crores for the quarter ended 30th September 2025. For the half year ended September '25, the profit stood at INR 149 crores. Thank you. Now it's over to Ms. Bhoomika.

Sir, we will start with the Q&A.

Yes.

[Operator Instructions] We take the first question from the line of Amit Anwani from PL Capital.

Congratulations for the very strong execution, which we have done. So now my first question, again on execution. We have already done kind of 33% growth for first half to first half. And I recollect you guiding about 20% plus for full year growth. So now are we changing that strong since the execution has been quite strong in H1. So just first thing, I wanted to understand on the guidance. And second, on the order prospects for next 6 months, we understand that you have won one international consulting order again in Africa, which you announced about INR 600-plus-odd crores. And H1 intake is roughly about INR 3,700-odd crores. So what is the full year target now? And what are the prospective orders? And on the execution, are we changing our guidance?

For the guidance purpose, in the turnover, we are giving guidance of 25-plus percent -- 25% plus. And we will stand by our margins, segment profit of around 25% in the consultancy business. And in the LSTK, we will maintain 6% to 7% segment profit. And for the rest of the portion, Mr. Vivek Midha will answer.

Amit, this is Vivek. Just to update you on the business prospects of it. As of today, we have already crossed INR 4,000 crores, okay? And we are moving towards our last year's target, INR 8,000 crores. We are going to definitely cross that INR 8,000 crore mark and hope to get more than that. Internationally, when you are talking about this project this year, we have been able to secure around INR 1,600 crores from overseas. So this year, in the consultancy segment, overseas has been -- has contributed more, and we are targeting a few major projects more in this -- in months to come, you will hear more information on that. At the same time, we are working in the domestic market. So prospects are good. We will definitely cross the last year's mark, and it will go beyond that definitely.

So that's great to hear. So one thing is that you highlighted INR 1,600 crores out of INR 4,000 crores, that is 40%. So are we eyeing for 40% plus consultancy contribution in the INR 8,000-plus order inflow, which you're going to have this year?

It would definitely be as part of consultancy, normally it remains around 40% to 50% within the consultancy segment. Overall, it would be somewhere around 20% to 25% in the overall.

Understood. Second question, I was just observing the revenue from consultancy overseas, which was kind of INR 85 crores to INR 100 crores last year, quarterly run rate. And now this year, it is about INR 70 crores to INR 75 crores quarterly run rate despite the overseas consultancy order book has been massive. We won massive orders last year also. So any particular reason of this not picking up? In fact, it has declined the overseas consultancy revenue this year?

Actually, till now, our major client was Dangote Refinery in Nigeria, and we were getting turnover from our Mongolia business also. Now these projects are going to be tapered because the work has been completed. But since we have got good order in the '24, '25 itself in the foreign territory, so that business has started execution taking on. So we are confident that in the next quarter, you will see the results of massive order book in the foreign territory.

Understood, sir. And are we targeting the similar 50-50 mix or since the turnkey was very strong this quarter. So what is the mix we are expecting for this year now?

On an annual basis, it will be 50-50 or 50% to 48% at most.

Understood. Lastly, sir, on the losses from associates, I'm assuming that this is because of the shutdown in Ramagundam. So just an update on that because I think H1 basis, the losses has been massive. And on the PAT level, we -- the numbers are lower because of that despite very strong performance. Just wanted to understand an update on Ramagundam.

In this quarter, Ramagundam project was under shutdown for 45 days out of 90 days. So in this quarter also, we have loss of around INR 25 crores. But in the third quarter, the project -- that project -- the plant is going well, and we are expecting profit in the third quarter. And we are expecting and we are definitely expecting that third quarter will give profits. There was some technical problem. So the plant was under shutdown for 45 days in the second quarter.

We take the next question from the line of Mohit Kumar from ICICI Securities.

Congratulations on a very good quarter. Sir, first question is on the EBIT margin for the consultancy. In this quarter, it was 28%. Is there any one-off in the -- any one-off which we should be aware of?

Sir, I could not understood actually.

So the EBIT margin on the consultancy is 28% during the quarter. Is there any one-off?

You are asking about the write-back.

No, no. The margin on the consultancy, EBIT margin.

Actually, in this quarter, we have profit segment of 28%. But on the half yearly basis, it is around 25%. And we are sure that we will be able to secure our margin of around 25% on overall basis in the consultancy segment. And in the LSTK segment, we are maintaining the segment profit of 6% to 7%.

Understood, sir. And sir, any outlook on the domestic consultancy order inflow or pipeline? We were also -- there was an IOCL Paradip Phase 2 project. Is the tender out?

Mr. Vivek Midha will answer.

With respect to the IOCL Paradip, there's no tender is going to come out. It is -- we are in the Phase 1 of execution. As soon as the Phase 1 is completed, they will have their management approval and they will proceed with the Phase 2. So most of the phases has been awarded to us. It's that -- we'll get the work order for the Phase 2 subsequently when the Phase 1 is completed. So Phase 1 is progressing at this point of time.

Right. Understood, sir. Is it right to say that, sir, Phase 1 was nearly INR 100 crores worth of project and Phase 2 will be much, much larger. If I'm not wrong, it should be around INR 900 crores. And will be booked in this fiscal?

Sorry.

Will be booked in this fiscal year, the balance Phase 2 or next year -- next fiscal?

It should come towards the end of this fiscal year. Towards the end, it should come. Because the Phase 1 is in progress, and we are going to submit the reports, the study reports and then they will take the Board approval and then decide on the proceeding on the job. So we are hopeful that by the end of this financial year should be done. Phase 1 should be done and they should get the clearance or otherwise, it would be early next financial year, it should be awarded.

And sir, any other large domestic pipeline order pipeline -- domestic order in pipeline, which we are looking at in H2 [indiscernible]?

You have this Andhra refinery, which is going on. We are working on this feasibility study. Hopefully, the second phase. If this study is accepted, then they will come with the implementation phase. Similarly, there's a petrochemical complex ECPL, they are thinking of expansion. The tender could come. There could be some small specialty chemical projects, various studies are being done by IOCL and they are thinking of implementing the various specialty chemical projects. So those are expected to come in this financial year.

We take the next question from the line of Prateek from Intelsense.

Sir. My question was on the write-back that we have done, I think about INR 35 crores of write-back. Can you, sir, give a light on as to which project this was? And like when was the provision actually made in the past for this INR 35 crore amount?

Actually, this provision relates to one of the projects, Dangote Refinery in Nigeria. So that provision is kept for the defect liability period. Whenever this defect liability period is over, client releases our bank guarantee and then provision is reversed. So client is reversing our bank guarantee in the piecemeal basis. So in this quarter, we have got the provision reversal of INR 35 crores based on the reduced liability on this project.

And sir, like you said, it's on a piecemeal basis. Is any other amount that is -- we are expected to receive on this?

A small portion is balanced. That will be released in the due course of time, maybe in this quarter or next quarter.

Okay. Just sir, one last question. Sir, in our last con-call, we had mentioned that there were several projects which are in advanced negotiation stage. So in this -- like this quarter orders, have those materialized or still -- I mean, we are expecting those kind of orders?

You can see our order book of INR 13,000 crores. Definitely, some of the orders have been matured. And in this quarter, we have already got the order of INR 3,600 -- INR 3,700 crores. So definitely, our efforts are fruitful, and we have got some of the order.

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

Sir, firstly, sir, we were also looking for some diversification in terms of moving away from the oil refinery space and then looking for the hydrogen opportunity going ahead. So sir, where are we? Some work was also done earlier, which were informed in some forum by the MD. Correct me there, sir, if I'm with the information.

With respect to the diversification, definitely, we have done diversification in this segment. We have moved out of basically the hydrocarbon today. Our infrastructure business is almost more than the hydrocarbon business. That's a major diversification. With respect to the new areas, which we have talked about like hydrogen [Foreign Language] coal gasification [Foreign Language] biorefinery [Foreign Language]. Biorefinery, you know that we have already done one biorefinery, bamboo-based biorefinery. This year, we have been -- recently, we have been awarded one assignment for coal gasification from the coal to SNG by NTPC, [Foreign Language] assignment, which we are executing. We're anticipating this kind of assignments from other clients also in the bidding process for various projects of this sort.

Right, sir. Sir, when we look at our capital investment in the various JVs, Ramagundam Fertilizer is there -- and then, we have a small stake in the Numaligarh refinery also. So what has been the contribution and, if any, in terms of any dividend or -- and how is the performance there? I think our major investment is -- for this 4% stake in the tune of INR 830 crores.

Yes, it will be coming in the next quarter. Dividend will be coming in the next quarter. So they are basically in the expansion phase. So they are giving the limited dividend. In the last financial year, they have given the substantial dividend. But going forward, they are investing the money for their new project. So whatever dividend they have declared for the last financial year, that will be coming in the next quarter.

Okay. So what was the amount, sir, last year, how much we have received?

In this year, around INR 20 crores will be coming.

Okay. And sir, any -- we will hold on to this minority stake of 4% in the total realm of things, we are only holding 4% of the entity. So -- or we can also look forward for divesting the stake?

Actually, at this moment, we have a percentage of 4.37%. And whenever opportunity comes, we will review it.

Okay. And also, sir, we have two upstream assets investment also under [indiscernible] 9. So already you have mentioned that during the bidding stage, there was -- the project cost was envisaged at INR 300 crores, as mentioned in the presentation. So we have not invested anything on these assets as of now.

We are not investing any further. Basically, whatever investment was done is done. So we are not anticipating any further investment in this block.

And lastly, sir, with the reversal of this INR 35 crores because of the Nigerian and no deferred project, which you mentioned to the earlier participant, that means net of -- that has moved up the profit by that amount. So we need to factor in that number in terms of the profitability. That is the...

A reversal of provision is a continuous process because provisions are reversed whenever defect liability period of the project is over. So it's a routine business for EIL. Some of the provisions are created and some of the provisions are reversed. So this is not a cause of worry for EIL.

So what is the net impact? How much provision we have made, if any, for this quarter or for the first half? And how much have been reversed in totality?

For this quarter, it is reversed on an overall basis. I think it is minus 12. But in the last quarter, it was on positive side. So sometimes it is on positive side, sometimes it is on negative side.

As for contractual provision, we create the provision and as for the contractual provision, we write back the provision. So this is a continuous process. Over the tenure of the project, the provisions are created when the project is completed and in case any liability does not come, we reverse that. So it's basically a continuous process.

In the coming time, some more projects are going to be closed or deferred is going to be over. So it's a continuous process.

And sir, lastly, on the cash on the books and what steps are we taking? How can we create value through that cash through sharing with investors? Or what is the best possible way? What is the closing balance, the cash balance we have? And what are the -- how are you looking forward to deploy that?

Currently, all the cash is being deployed as per DP guidelines. And we are constantly looking for the investment opportunity where the CapEx are lower and stand-alone facility. Whenever we get a good opportunity, definitely, management will consider for the investment of the same like NRL and RFCL. And we are constantly looking for it.

Closing balance, sir, can you confirm? Cash on book.

It is between INR 900 crores to INR 1,000 crores.

[Operator Instructions] We take the next question from the line of S. Ramesh, an individual.

Congrats on your results. So if you look at the split between the turnkey and the consulting income, so if your turnkey revenue share is higher, it is a drag on your margins, right? You are talking about single-digit margin. So as a strategy, how do you view the split between the two revenue streams from consulting and turnkey? And so -- and how do you see your overall strategic objective of maintaining ROCE for the business based on this blend?

Actually, it is definitely we have more segment profit in consultancy segment, and less in LSTK business segment. But you know in the Indian economy, there is limitations on the consultancy business because at 1x mega projects are not more than 2 or 3. So whenever we are having opportunity in India in the consultancy business, definitely, we are grabbing it and we are expanding our footprint in international market also for the consultancy business. And with the balanced maneuver, we are doing the LSTK job so that we can have a good turnover as well as good bottom line also. As a strategy, we are trying to maintain consultancy business around minimum 50%.

Basically, you are saying that overall, you will be able to sustain your ROC based on the top line growth and the cash flows. Is that right way to...

Basically, LSTK gives the top line, but consultancy gives the bottom line. So we are striking a balance between the two.

Okay. So in terms of the accounting in turnkey projects in terms when you book the income, is there any various impact? And how -- what is the percentage booking you do in terms of the overall time line for the turnkey revenue?

Actually, in the turnkey business, turnover is coming on cost progress basis. It is not based upon the timing or billing. Once we get the project, the whole turnover is booked within the 3 to 4 years because the mega projects take minimum 3 to 4 years. And that is the time line for the mega consultancy as well as LSTK project.

Okay. So fine. So in terms of your investment holding, you're getting about 12% return if you look at the other income, the value of the investment in the stand-alone numbers. So is there any strategic rationale for holding on to these investments in Ramagundam Fertilizers, for example, or the other companies, given that the returns are not really what you would expect from equity investments. So yes, what is the management thought process on the equity investments? Do you expect the returns to go up in future? Or is there a thought process in terms of exiting some of the investments which may not be productive?

Actually, I think Ramagundam is a very good investment because India is feeling short of urea and Ramagundam is able to generate minimum profits of INR 500 crores on an annual basis. But we are facing some technical problems. That's why project is going for the shutdown on time-to-time basis, but we have sorted out the issue. And in the next quarter itself -- in this quarter itself, the plant will generate the profit. So this is not a question of worry for EIL because our investment is safe in the Ramagundam project.

We take the next question from the line of Mohit Kumar from ICICI Securities.

Sir, the questions is, Ramagundam, I think was making profit for the last couple of years, right? So what has happened in last 2 quarters, the losses have been in the first quarter was INR 8 crores. I think second quarter has only widened, right? So is it fair to expect that from Q3 onwards, you can start doing normal profit? Or do you think this will continue for some more time?

Actually, we are facing some problem in stabilization. And definitely, you are right in the first quarter, there was shutdown. In the second quarter, there was shutdown also for the 45 days. But now we have sorted out the problems and now plant is running well. And definitely, we are going to get profit in this quarter.

Understood. Sir, my second question is on the order intake guidance for the full year. I think we spoke -- I think we have guided for broadly INR 8,000 crore kind of order intake. Is it fair to assume that P&C will be close to INR 5,000 crores order inflow for the entire fiscal? Or will it be a lower number?

You are talking about the order inflow or...