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Sadbhav Engineering (SADE)
Construction
Strong results; in line to meet full-year estimates. Strong 3QFY11 revenue growth of
51% yoy was likely led by execution of 2 large BOT projects. Our full-year FY2011E estimates
imply a revenue growth requirement of about 41% in 4QFY11E and accommodate an 80 bps fall
in margins. Strong order backlog of Rs78 bn provides revenue visibility. Near-term construction
revenues are likely to be led by progress of execution of existing BOT projects. Reiterate BUY on
attractive valuations, likely strong near-term earnings growth and strong balance sheet.
Strong results continue led by execution of large orders
Strong revenue growth, in line with estimates. Sadbhav Engg reported a strong revenue
growth of 51% yoy in 3QFY11 to Rs4.7 bn likely led by pick-up in execution of the two large
BOT road projects in the backlog. The revenues were in line with our estimates of Rs4.5 bn
EBITDA expands 200 bps on lower construction expense; in line with estimates. EBITDA
margins expanded 200 bps to 11.1% in 3QFY11 due to lower construction cost as a percentage
of sales. The margins were in line with our estimates of 11%. The company reported a net PAT
of Rs264 mn, versus 3QFY10 PAT of Rs141 mn and our estimate of Rs231 mn.
9MFY11 performance. In the nine months ending December 31, 2010, Sadbhav reported
revenues of Rs11.6 bn, up 45.4% yoy. Margins expanded by about 80 bps yoy to 11.6%
leading to a net PAT of Rs656 mn in 9MFY11, up 84% yoy from Rs357 mn in 9MFY10 .
In line to meet full-year estimates
Our revenue estimate of Rs18bn in FY2011E (growth of 43.7% yoy) and 11.3% margin implies a
revenue growth of 43.7% an EBITDA margin requirement of 10.7% (accommodates an 80 bps
fall in margins) for 4QFY11E.
Award of the NHAI order in 3QFY11 pumps up order backlog
Sadbhav won an EPC order worth Rs14 bn in Oct-10 from NHAI for the rehabilitation and upgradation
to 2-lane of Multai-Chhindwara-Sconi section in MP and Maharashtra. The management
indicated an order backlog of Rs77-78 bn in Dec-2010 comprised of 72-73% from road segment
(led by in-house development projects), 7-8% from irrigation segment and remaining from mining.
Retain estimates and target price of Rs175/share; reiterate BUY
We maintain our estimates of Rs62 and Rs84 for FY2011E and FY2012E. We reiterate BUY with a
target price of Rs175/share based on (1) attractive valuations, (2) strong order book, and (3)
positive outlook for infrastructural investments.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Sadbhav Engineering (SADE)
Construction
Strong results; in line to meet full-year estimates. Strong 3QFY11 revenue growth of
51% yoy was likely led by execution of 2 large BOT projects. Our full-year FY2011E estimates
imply a revenue growth requirement of about 41% in 4QFY11E and accommodate an 80 bps fall
in margins. Strong order backlog of Rs78 bn provides revenue visibility. Near-term construction
revenues are likely to be led by progress of execution of existing BOT projects. Reiterate BUY on
attractive valuations, likely strong near-term earnings growth and strong balance sheet.
Strong results continue led by execution of large orders
Strong revenue growth, in line with estimates. Sadbhav Engg reported a strong revenue
growth of 51% yoy in 3QFY11 to Rs4.7 bn likely led by pick-up in execution of the two large
BOT road projects in the backlog. The revenues were in line with our estimates of Rs4.5 bn
EBITDA expands 200 bps on lower construction expense; in line with estimates. EBITDA
margins expanded 200 bps to 11.1% in 3QFY11 due to lower construction cost as a percentage
of sales. The margins were in line with our estimates of 11%. The company reported a net PAT
of Rs264 mn, versus 3QFY10 PAT of Rs141 mn and our estimate of Rs231 mn.
9MFY11 performance. In the nine months ending December 31, 2010, Sadbhav reported
revenues of Rs11.6 bn, up 45.4% yoy. Margins expanded by about 80 bps yoy to 11.6%
leading to a net PAT of Rs656 mn in 9MFY11, up 84% yoy from Rs357 mn in 9MFY10 .
In line to meet full-year estimates
Our revenue estimate of Rs18bn in FY2011E (growth of 43.7% yoy) and 11.3% margin implies a
revenue growth of 43.7% an EBITDA margin requirement of 10.7% (accommodates an 80 bps
fall in margins) for 4QFY11E.
Award of the NHAI order in 3QFY11 pumps up order backlog
Sadbhav won an EPC order worth Rs14 bn in Oct-10 from NHAI for the rehabilitation and upgradation
to 2-lane of Multai-Chhindwara-Sconi section in MP and Maharashtra. The management
indicated an order backlog of Rs77-78 bn in Dec-2010 comprised of 72-73% from road segment
(led by in-house development projects), 7-8% from irrigation segment and remaining from mining.
Retain estimates and target price of Rs175/share; reiterate BUY
We maintain our estimates of Rs62 and Rs84 for FY2011E and FY2012E. We reiterate BUY with a
target price of Rs175/share based on (1) attractive valuations, (2) strong order book, and (3)
positive outlook for infrastructural investments.
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