Sadbhav Engineering :: 2QFY2012 results review: Angel Broking

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Sadbhav Engineering
For 2QFY2012, Sadbhav Engineering’s (SEL) numbers came in ahead of our
expectations. The company reported strong 65.0% yoy growth on the top-line front
to `430.4cr (`260.9cr) vs. our estimate of 48% growth. SEL has been able to
maintain sturdy execution pace for captive road BOT projects since the past few
quarters, leading to robust revenue growth. On the operating margin front, the
company posted OPM of 10.5% (12.0%), below our estimate of 11.3%, likely due
to subcontracting of road BOT projects. Interest cost stood at `15.4cr (`9.0cr), up
70.9% yoy, on account of increased debt levels to `455.7cr from `396.1cr in
FY2011 and a high interest rate scenario. On the earnings front, SEL reported
healthy 32.1% growth yoy to `18.1cr (`13.7cr), higher than our expectation of
`16.9cr on account of better-than-expected top-line growth. We maintain our
Buy recommendation on the stock with a target price of `167.