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The Engineers India stock has dropped about 5 per cent in trading today after disappointing results for the quarter ended June 2015. While net sales dropped by 10 per cent to Rs 3,905 crore compared to the June 2014 quarter, net profit fell by a sharper 29 per cent to Rs 568 crore.
Operating margins too were thinner at 7.3 per cent in the latest quarter, compared with 12.5 per cent a year ago.
Both the consulting division (58 per cent of revenues) and the turnkey projects division ( 42 per cent of revenues) equally contributed to the lacklustre performance.
Although the revenue mix was almost similar in the June 2014 quarter too, the drop in overall operating margins is explained by the deterioration in the performance of the consulting division.
This high margin segment clocked an operating margin of only 14 per cent in the June 2015 quarter, a good ten percentage points below the year-ago period. Taking up of less lucrative projects during the slowdown could have been a reason for the deterioration in margins.
Order inflows too remained tepid. The company received orders worth only Rs 429 crore this year compared with Rs 1,295 crore in the year-ago period.
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