Sadbhav Engineering Ltd. share price target

Sadbhav Engineering’s (SEL) topline de-grew 2.7% YoY to | 807.0 crore (our estimate: | 929.4 crore) on account of a sharp decline in revenues from irrigation division (slumped 64% YoY to | 72.3 crore) . The EBITDA margin was flat YoY at 10.8% and was above our estimate of 10.3% on account of lower other expenses (3.3% as a percentage of sales in Q1FY17 vs. 3.8% in Q1FY16). PAT grew 23.4% YoY to | 48.7 crore (our estimate: | 40.7 crore) despite a lower topline on account of lower-than-expected effective tax rate [(0.5% in Q1FY17 vs. our estimate of 20.0%) due to a MAT credit entitlement of | 10.4 crore in Q1FY17]. On a PBT level, at ~| 48.9 crore, it was largely in line with our estimate of | 50.8 crore.

They believe Sadbhav is well poised to capture opportunities across sectors given its healthy orderbook, strong execution capabilities and a robust order pipeline. Consequently, we expect its earnings to grow at 27.5% CAGR in FY16-FY18E. Hence, we maintain our BUY recommendation on the stock with an SOTP based revised TP of | 330. We have valued SEL’s 68% stake in SIPL at | 157/share and EPC business at | 175/share (8x FY18 EV/EBITDA implying 13.6x FY18 EPS).

 

Sadbhav Engineering Ltd. (SEL) delivered strong 1QFY17 RPAT beat, ~39% ahead of our estimates, aided by Rs 104mn MAT credit entitlement. Despite adjusting for the MAT credit, APAT of Rs 382mn was ~9% above our estimates. The debt on the balance sheet stood at Rs 12.5bn (Rs 1bn increase QoQ) mainly comprising working capital debt with gross standalone D/E at 0.82x.On the back of a strong order pipeline, the management is confident on achieving its FY17E order inflow guidance of Rs 50-70bn, which augurs well for our FY16-18E net revenues/APAT CAGR of 16/41%. Maintain BUY with TP of Rs 324/sh.

Valuation: They maintain BUY stance on SEL with SOTP-based target price of Rs 324/share, value the (1) Standalone EPC business at Rs 211/share (15x one-year forward Mar-18 EPS) and (2) SEL stake in SIPL at 20% holding company discount to current market capitalization at Rs 108/sh.

 

Sadbhav Engineering reported QoQ revenue growth of 14% to Rs.8.6bn vs Rs. Rs.7.5bn and YoY de-growth of 11.3% from Rs. 9.7bn last year, led by sharp decline in YoY revenues from roads segment by 15% and...

Sadbhav Engineering (SEL) reported an impressive Adj. PAT for 4QFY2016. On the top-line front, it reported an 11.3% yoy decline to Rs858cr, which is lower than our estimates. Lower contribution from the in-house BOT portfolio led to such revenue decline. Further, higher employee expenses in addition to low contribution from in-house BOT p..

Sadbhav Engineering's (SEL) topline de-grew 11.3% YoY to | 858.0 crore (I-direct estimate: | 899.9 crore) mainly on account of a sharp decline in the revenues from transport division which fell 14.8% YoY...

Sadbhav Engineering Ltd. (SEL) reported weak adjusted PAT (54.2% de-growth YoY). Multiple one-off/exceptional items resulted in a higher reported PAT (4.7% YoY growth). EBITDA margins contracted 41bps YoY to 9.5% on back of higher material and employee expenses. FY16 EBIDTA shrunk by Rs 300mn, because of VAT outgo on the Rohtak-Hissar BOT, due to `change in law?. SEL will receive the same from SIPL (through NHAI, total Rs 520mn) in FY17E.

Sadbhav Engineering Ltd. (SEL) delivered a muted 3QFY16, as revenue/EBITDA was 15/17% below our estimates. EBITDA margins contracted 36bps YoY (102bps QoQ) to 9.8% because of the VAT on the Haryana project (higher other expenses), which offset the 189bps YoY expansion in gross margins. Net profit was 26% below expectations.

Operating efficiency leads to higher margins: SEL is an integrated player with strong in-house execution capabilities. It has proven track record of timely completion & excellent quality of projects by receiving bonus for early...

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,...

Sadbhav Engineering Ltd. (SEL) delivered strong execution with its revenue coming in 14% ahead of estimate. Net profit beat of 21% was a result of the revenue growth and 80bps EBIDTA margins expansion. The balance sheet remains healthy with net debt at Rs 11bn and net D/E at 0.77x. SEL has guided for FY16E end debt at Rs 5bn and net D/E 0.3x