Sadbhav Infrastructure ended FY17 with PAT losses of INR 3.5 bn, down from loss of INR 4.0 bn reported in FY16. However, adjusting for non-cash items (MMR provision, depreciation and non-cash financial itms), the cash profit stood at INR 1.2 bn; implying positive operating leverage as the road portfolio is getting in steady state phase. We estimate the gross toll + annuity collection to grow 2.5x to INR 21.6 bn by FY20 from INR 8.5 bn in FY17 as the new projects become operational and the existing ones' stabilize. The standalone debt stands at INR 12.7 bn, however it's not a major concern as the...

Robust orders expected to come up in roads in BOT & HAM: Government of India has set target of awarding 25,000 km of road projects in FY17 vs 10,000 km in FY16 under the Ministry of Road Transport and Highways and the National Highways Authority of India. We expect significant pick up in awards in FY17 on account of government's various initiatives, focus on HAM and EPC contracts and structural changes in the concession agreement. NHAI is expected to award ~ Rs. 240 to 250 bn of bids in new hybrid model and the BOT toll model in FY17. SIPL has won 4 HAM projects, we believe,...

For 1HFY2016, Sadbhav Infrastructure Project Ltd (SIPL) reported a consol. top-line of Rs274cr (vs Rs500cr in FY2015). The Reported top-line (for 1HFY2016), on a yoy basis benefitted from (1) 16.2% toll income growth across Hyderabad-Yadagiri project, (2) 69.2% gross toll income growth across Maharashtra Border Check Post project (as 4 new check posts commenced operations in 2QFY2016; 18% toll hike seen during the quarter), and (3) 11.1% toll income growth seen across the Ahmadabad Ring Road project. The Reported EBITDA for 1HFY2016 stood at Rs180cr while the EBITDA margin for the same period was at 65.7% (vs 61.7% for FY2015). Higher interest expenses (Rs284cr for 1HFY2016 vs Rs526cr for FY2015) led to losses for SIPL of Rs159cr for 1HFY2016. Outlook and valuation: We expect SIPL to report a strong 44.3%/47.8% revenue/EBITDA CAGR over FY2015-17E. Management expects SIPLs entire BOT portfolio (we model MBHPL to commission operations in FY2018E only) to be operational by FY2017E only. Toll collection at its existing projects would further ramp-up, going forward. Interest expenses accounted for 170% of the FY2015 consol. EBITDA. We expect this ratio to decline to ~95% by FY2017E. PAT level losses since FY2013 have eroded overall net worth of consol. entity from...