Stock Recommendations For Your Portfolio

ENGINEERS INDIA | BSE CODE: 532178 | VOLUME: 65518 | CMP: Rs.235

Engineers India Limited (EIL) is one of India’s leading engineering consultancy and EPC companies focused primarily on the hydrocarbon sector. Its foray into the international hydrocarbon market has started yielding good results following recent big ticket orders worth Rs 1,170 crore from the Middle East and North Africa. An increasing focus on non-hydrocarbon sectors including fertilisers, non-ferrous mining and metallurgy, power, strategic crude oil storage, water, and wastewater treatment projects as well as other infrastructure projects will aid the company’s growth. EIL’s order book has improved to Rs 3,929.5 crore (2.2x TTM revenues) led by Rs 1,295 crore of new orders booked in Q1FY15 as against Rs 1,155 crore booked in FY14. EIL has a debt-free cash rich balance-sheet with cash and cash equivalent of Rs 2,531.55 crore as on FY14, translating into cash per share of Rs 75. Currently the stock is trading at a P/E multiple of 18.4x and EV/EBITDA of 3.62x its FY14 earnings.

HEG | BSE CODE: 509631 | VOLUME: 4651 | CMP: Rs.285

HEG operates three business divisions which include a graphite electrode business, power division and carbon specialties’ division. HEG is India’s leading graphite electrode manufacturer and the company exports over 80 per cent of its production to more than 25 countries of the world. Its graphite division has an annual capacity to make 80,000 MT of UHP grade electrodes. Moreover, the fact that two major graphite industry players announced permanent closure of four graphite electrode plants aggregating to nearly 10 per cent of the global capacity now offers an opportunity for HEG to raise its market share in those regions. For Q1FY15, HEG reported net profit of Rs 18.94 crore as against net loss of Rs 9.32 crore in Q1FY14. Its sales rose 47.85 per cent to Rs 346.12 crore in Q1FY15 as against Rs 234.10 crore in the corresponding quarter. Currently HEG is trading at a TTM PE ratio of 9.9 and on the basis of price to book, it trades at 1.12x.