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Sadbhav Engineering (SADE)
Construction
Blockbuster 4Q ends a consistent year on a positive note. Sadbhav reported very
strong revenues of Rs10.5 bn, up 129% yoy, versus estimate of Rs6.4 bn, likely led by
execution of large BOT projects. EBITDA margin declined to 8.7% (11.9% in 4QFY10)
due to higher construction expenses. Net PAT of Rs539 mn trebled yoy and significantly
surpassed our estimate of Rs364 mn. Strong 4Q added to earlier gains resulted in a fullyear
sales growth of 76% and net PAT of Rs1.2 bn. Working capital improved likely on
higher proportion of in-house BOT projects (66 versus 125 days at end-FY2010). Retain
BUY.
Strong revenue growth likely led by execution of BOT projects
Sadbhav reported a strong revenue growth of 129% yoy in 4QFY11 to Rs10.5 bn, significantly
ahead of our estimates of Rs6.4 bn. The strong growth was likely led by strong execution of large
BOT projects in the backlog of the company. The company is likely to have started execution of all
the BOT projects in this quarter leading to the strong revenues – only the Rohtak-Panipat project
was awaiting appointed date (management had expected to receive it in February 2011).
EBITDA margin contracts on higher construction expenses; net PAT almost trebles yoy
Sadbhav reported an EBITDA margin of 8.7%, down 320 bps yoy and 140 bps on a sequential
basis. The lower EBITDA margin was primarily on account of higher construction expenses as a
percentage of sales which increased to 87.6% in 4QFY11 from 82.2% in 4QFY10. The fall was
partly compensated by lower other expenses as percentage of sales. We had built in a yoy margin
compression of 120 bps (10.7%). Net PAT at Rs539 mn was up 197% yoy primarily led by the
strong revenue growth. Slightly lower effective tax rate of 29% in 4Q was primarily on account of
an adjustment for excess tax provision in the earlier year.
Consistent performance results in strong FY2011; lower working capital improves balance sheet
A very strong last quarter added to earlier gains in the year resulting in FY2011 revenues of Rs22.1
bn (up 76% yoy) and 22% ahead of our estimate. Margins contracted by 80 bps yoy to 10.2%
leading to a net PAT of Rs1.2 bn in FY2011, up 122% yoy from Rs538 mn in FY2010.
Sadbhav reported an improved net working capital (excl. cash) of 66 days of sales at end-FY2011
versus about 125 days of sales at end-FY2010 likely on higher revenue proportion from execution
of in-house BOT projects. The improvement was primarily led by lower debtors (113 days of sales
versus 128 at end-FY2010) and lower loans and advances (97 days versus 136 days a year ago).
Retain BUY with target price of Rs175/share; will revisit estimates post conference call
Maintain estimates of Rs8.7 and Rs10 for FY2012E and FY2013E. Reiterate BUY (TP: Rs175) on (1)
attractive valuations, (2) strong order book, and (3) positive outlook for infrastructure investments.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Sadbhav Engineering (SADE)
Construction
Blockbuster 4Q ends a consistent year on a positive note. Sadbhav reported very
strong revenues of Rs10.5 bn, up 129% yoy, versus estimate of Rs6.4 bn, likely led by
execution of large BOT projects. EBITDA margin declined to 8.7% (11.9% in 4QFY10)
due to higher construction expenses. Net PAT of Rs539 mn trebled yoy and significantly
surpassed our estimate of Rs364 mn. Strong 4Q added to earlier gains resulted in a fullyear
sales growth of 76% and net PAT of Rs1.2 bn. Working capital improved likely on
higher proportion of in-house BOT projects (66 versus 125 days at end-FY2010). Retain
BUY.
Strong revenue growth likely led by execution of BOT projects
Sadbhav reported a strong revenue growth of 129% yoy in 4QFY11 to Rs10.5 bn, significantly
ahead of our estimates of Rs6.4 bn. The strong growth was likely led by strong execution of large
BOT projects in the backlog of the company. The company is likely to have started execution of all
the BOT projects in this quarter leading to the strong revenues – only the Rohtak-Panipat project
was awaiting appointed date (management had expected to receive it in February 2011).
EBITDA margin contracts on higher construction expenses; net PAT almost trebles yoy
Sadbhav reported an EBITDA margin of 8.7%, down 320 bps yoy and 140 bps on a sequential
basis. The lower EBITDA margin was primarily on account of higher construction expenses as a
percentage of sales which increased to 87.6% in 4QFY11 from 82.2% in 4QFY10. The fall was
partly compensated by lower other expenses as percentage of sales. We had built in a yoy margin
compression of 120 bps (10.7%). Net PAT at Rs539 mn was up 197% yoy primarily led by the
strong revenue growth. Slightly lower effective tax rate of 29% in 4Q was primarily on account of
an adjustment for excess tax provision in the earlier year.
Consistent performance results in strong FY2011; lower working capital improves balance sheet
A very strong last quarter added to earlier gains in the year resulting in FY2011 revenues of Rs22.1
bn (up 76% yoy) and 22% ahead of our estimate. Margins contracted by 80 bps yoy to 10.2%
leading to a net PAT of Rs1.2 bn in FY2011, up 122% yoy from Rs538 mn in FY2010.
Sadbhav reported an improved net working capital (excl. cash) of 66 days of sales at end-FY2011
versus about 125 days of sales at end-FY2010 likely on higher revenue proportion from execution
of in-house BOT projects. The improvement was primarily led by lower debtors (113 days of sales
versus 128 at end-FY2010) and lower loans and advances (97 days versus 136 days a year ago).
Retain BUY with target price of Rs175/share; will revisit estimates post conference call
Maintain estimates of Rs8.7 and Rs10 for FY2012E and FY2013E. Reiterate BUY (TP: Rs175) on (1)
attractive valuations, (2) strong order book, and (3) positive outlook for infrastructure investments.
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