Engineers India IPO - Go for it

Engineers India (EIL) is tapping the equity market with its offer for sale to raise around Rs 909.7 – 977.1 crore on its price band of Rs 270 – 290. The issue opens on 27th July 2010 and closes on 30th July 2010. The company is divesting 3.36 crore equity shares. The proceeds will go entirely to the Government of India and after the completion of the issue the holding of Government of India will decrease to 80.4 per cent from present 90.4 per cent as they are divesting 10 per cent of their stake.

EIL has ample experience and has serviced more than 49 refinery projects, 7 petrochemical complexes, 35 oil & gas processing projects, 205 offshore platform projects, 37 pipeline projects, 11 ports and storage terminals projects, 8 Fertilizer projects and 26 mining, metallurgy projects, etc.

The company has a leadership position across the value chain of the hydrocarbon industry and a strong financial and position and healthy order book adds to its strengths. After recent bonus and split the company has Rs 168.47 crore equity capital consisting of 33.69 crore equity shares of Rs 5 each. At the lower and upper price band of Rs 270 and 290 the stock trades at a P/E of 20 – 22x on its FY10 earnings. The valuation looks to be in line with its peers. We suggest our subscribers to invest in the offer for sale looking at the strong economic growth of the country in which the company can contribute largely and also the price bands are much lesser than the current share price of Rs 313. One can sell their existing stock at the higher price and may invest in the offer for sale.