Sadbhav Engineering (SEL) reported a strong set of numbers for 2QFY2016. On the top-line front, SEL reported a strong 25.4% yoy growth to Rs746cr in 2QFY2016. This was mainly on account of execution of in-house BOT projects (mainly Rohtak-Hissar project, which contributed ~Rs190cr) and lower base of the corresponding period of last year. The company posted an EBITDA margin of 10.8%, up 80bp yoy. Interest cost declined by 20.4% yoy to Rs18cr. On the bottom-line front, the companys reported PAT grew 158.4% yoy to Rs26cr. On adjusting for an exceptional item, the Adj. PAT grew 274.7% yoy to Rs38cr. SEL reported order inflow of Rs1,608cr during the quarter, taking the total inflows won during 1HFY2016 to Rs2,684cr. SEL is sitting on an order book of Rs9,306cr (Order Book to LTM ratio at 2.9x) as of 2QFY2016, which provides good revenue visibility. Outlook and valuation: Considering recent order wins and strong 1HFY2016 execution, we model revenue estimates of Rs3,481cr/Rs4,219cr for FY2016E/ FY2017E, respectively. Given the low competitive intensity for recently won Road EPC projects, cool-down in bitumen and aggregate prices (as captive BOT projects have fixed price contracts), we expect EBITDA margins to expand by 53bp during FY2015-17E to 10.8%. Further,...