Engineering Interest - Engineers India

Engineers India (EIL) formed a part of our recommendations in the Issue 25 (December 7, 2008). It was recommended under the choice scrip column at Rs 350 with a one year price target of Rs 441. Post-recommendation the scrip has touched a high of Rs 508.80 giving an overall appreciation of Rs 45.37 per cent. With a CMP of Rs 434.95 the scrip is still up 24.27 per cent over the recommended price. This is quite in contrast to the fact that the Sensex during the same period has appreciated 2.32 per cent. It should be noted that the scrip’s performance has been so good that it has already sped past its one year price target of Rs 441 and hence it calls for a review as to what should the investors do. In a market, which is yet to stabilise, it would be wiser to make money when the opportunity presents itself. Hence investors can book partial profits in this counter when it reaches our target price of Rs. 441.

Factors such as huge cash in the books worth Rs 1252 crore, zero debt  status, liquid investments worth Rs 136 crore, order book of whooping Rs 5000 crore, expanding focus from domestic to international projects, stronger management bandwidth and, last but not the least, the low valuations were some of the reasons why we had recommended EIL - Asia's leading design and engineering company. After booking partial profits in the counter,  we would advice investors to stay invested with the rest as this counter has the potential to generate better returns in long term. Besides, with the Q3FY09 results just round the corner there could be better expectation of results from EIL, which could have resulted in increased investor interest in the counter, which could push the scrip even giving further upside.