Engineers India extends fall on stake sale by government via OFS

The stock was down 1% at Rs 192 extending its previous day's 5% decline on the BSE.

Shares of Engineers India (EIL) were trading lower by 1% at Rs 192 on the BSE in early morning trade, extending its previous day’s 5% decline, after the government proposed 10% stake sale in the company through the offer for sale (OFS) which begins today.

The government has set the floor price of Rs 189 per share for OFS. The base price is 2.6% lower than the company's Friday’s closing price of Rs 194 on the BSE. The centre is offering 5% additional discount to retail investors. The government currently owns 69.4% stake in EIL.

Angel Broking recommends investors to apply for EIL shares in the OFS, given the attractive valuation.

EIL’s stock price in recent times has corrected owing to weakness in order awarding and depressed earnings being reported. At closing price of Rs 194, EIL stock factors in all the near-term concerns, the broking firm said in a client note.

EIL stock is available at FY2017E P/E ratio of 15.7x which is attractive considering the cash rich status of the company (Rs 2,279 crore cash as of Q2FY16) and its strong market positioning within the domestic Hydro-Carbons consulting space.

Further, in our view this space is likely to see strong awarding activity from hereon, it added.

Thus far in 2016, the stock underperformed the market by falling 20% as compared to 6% fall in the S&P BSE Sensex. The stock hit a 52-week high of Rs 252 on January 1, 2016 and a 52-week low of Rs 158 on August last year.