Sadbhav Engineering Ltd. share price target

15 February 2019 Revenue declined 1% YoY (LTL YoY) was above our estimate of 11.5%. PAT declined 9% YoY to INR563m, below our estimate of INR656m. segment (95% of revenue) grew by a healthy 23% YoY to INR8.8b, supported by strong growth of execution of in-house HAM projects. HAM EPC contributed 84% of Transport revenue (+228% YoY), while third-party EPC formed 16% (-72% YoY as third-party order book available for execution declined YoY). Irrigation segment (1.4% of revenue) de-grew by 73% YoY due to lower order backlog available for execution. Mining revenue declined by 61% YoY to INR281m. Management scaled down its FY19 revenue guidance executing a few existing projects. Notably, 61% of the existing order book has not been contributing to revenue. We note that margins in the year-ago period were supported by the execution of better-margin EPC projects (contributed 68% of revenue in 3QFY18 v/s only 16% in 3QFY19).

We increase SOTP based TP from Rs 375/sh to Rs 423/sh. SEL reported Rev/PAT miss of 8/15% as 58% of order book is yet to move into execution. EBITDA margins inched up 71bps YoY to 12.1% on account of increased contribution from higher margin captive HAM projects.

ICICI Securities Ltd | Retail Equity Research Sadbhav Engineering (SEL's) topline remained flattish at | 690.6 crore possibly on account of muted execution...

We maintain BUY with SOTP based TP of Rs 436/sh. SADE 1QFY19 net revenues at Rs 9.1bn was 11.0% below our estimates. EBITDA at Rs 1.1bn was 9.1% below our estimates, with EBITDA margin expansion of 43.9bps YoY to 11.7%. Increased mining equipment leasing/interest on subcontractor advances/FDR interest income contributed to 76% YoY increase in other income resulting in PAT of Rs 634mn, 20.1% above estimates.

Sadbhav Engineering (SEL's) topline de-grew 3.5% YoY to | 911.4 crore (our estimate: | 1004.3 crore) EBITDA margins expanded 44 bps YoY to 11.7% (our estimate:...

6 July 2018 Infrastructure Project (SIPL) intends to monetize its operational asset portfolio of 12 projects, proceeds of which will be utilized to (a) reduce debt at SIPL standalone level, (b) provide growth funding for the upcoming hybrid-annuity model (HAM) projects and (c) repay debt taken from Sadbhav Engineering (SADE). SADE intends to (a) focus on the highway segment, where it has the requisite expertise to execute projects, (b) move out of the irrigation segment (avoid projects with last-mile connectivity) and (c) continue with mining segment projects to keep the machinery occupied. SADEs revenue growth was muted over FY15-18 (6% CAGR) due to constrained execution in the newly ventured irrigation, mining and railway segments. However, SADE expects revenue of INR41b in FY19 and INR55b in FY20 (26 CAGR), driven by execution of the 12 HAM projects (76% of highway segment orders).

Sadbhav Engineering (SEL) a leading infrastructure company with presence in road, mining and irrigation segments. It has 19 BOT assets, including 8 under construction HAM projects

With growth prospects looking positive, margins inching higher and debt reduction likely we maintain BUY with SOTP based TP of Rs 438/sh SEL reported 4QFY18 net revenue at Rs 11.0bn (+6.9% YoY, +18.1% QoQ) was 3.4% below our estimates. EBITDA came in at Rs 1.2bn (+13.2% YoY, +17.3% QoQ). EBITDA margins inched up in FY18 to 11.8% (vs. 10.7% YoY) on account of increased contribution from HAM projects.

EBITDA margin expanded 60 bps YoY to 11.2% led by lower other expenses. It was largely in line with our estimate of 11.4% PAT grew 2.4% YoY to | 69.9 crore (our estimate: | 72.4 crore) Orderbook strong at | 13249 crore in Q4FY18 SEL has received order inflows worth | 8593 crore in FY18, taking its orderbook to a record | 13249 crore, 3.5x its TTM revenues. On the opportunity front, the company expects NHAI to award works worth ~| 1 lakh crore in FY19E. Bids worth | 18032 crore from NHAI on EPC basis, |...

30 May 2018 Revenue grew 7.0% YoY to INR11.0b, below our estimate of INR12.4b. EBIDTA came in at INR1.2b (+13.2% YoY), below our estimate of INR1.4b. Operating margin of 11.2% (+60bp YoY) was ahead of our estimate of 10.9%. PAT of INR699m (+2.4% YoY) came in below our estimate of INR880m due to lower other income (INR39m v/s est. For FY18, sales stood at INR36.