Sadbhav Engineering - Primed for Strong Growth; Result Update Q3FY15:: Edelweiss

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BUY Sadbhav Engineering: ICICI Securities, PDF link

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Fund raising to fuel growth…
Sadbhav Engineering (SEL) has announced that the Board of Directors of
the company has considered and approved fund raising by way of a
qualified institutions placement (QIP) for an amount not exceeding | 250
crore. The proceeds from the QIP will mainly be used to fund its growth
(capex requirement and WC requirement), going ahead. We maintain our
BUY recommendation on the stock given its strong order book is
providing revenue visibility, well funded equity for BOT projects portfolio,
strong execution track record and better earnings growth.
Raising | 250 crore of equity via QIP to fuel growth…
The Board of Directors on September 9, 2014 has approved fund raising
by way of a QIP for an amount not exceeding | 250 crore. Proceeds from
the QIP will mainly be used to fund its capex and WC requirement. Before
this QIP, we believe 80 lakh warrants issued to promoters would also get
converted into equity. Overall, we anticipate Sadbhav’s equity base would
get diluted by 12.6% (including promoter warrants) to 17.1 crore equity
shares while promoter holding will be maintained at ~47.3%.
BOT project needs | 250 crore as equity; funding largely in place…
SEL has an equity commitment of | 250 crore over the next two years for
the current BOT portfolio. To fund the same, it intends to use proceeds
from the QIP along with NCD proceeds of | 130 crore at SIPL.
Consequently, we do not see any equity gap in the SIPL BOT portfolio. In
terms of financial closure, all BOT projects (except Mysore Bellary) are
financially closed. Currently, the daily toll collection (except MNEL and
DPTL projects where it has a minority stake) stands at ~| 1.2 crore/day.
Going ahead, we anticipate toll collections will jump 2x to | 2.6 crore/day
once all projects are operational in FY17E.
Visibility remains strong in construction business…
In the last two years, SEL witnessed strong orders in the roads & mining
segment, taking the order book from | 7214 crore in FY13 to | 8941 crore
in FY14. The current order book is at | 8,336 crore, at 3.4x FY14 revenues
providing strong revenue visibility. Based on this, we anticipate SEL’s
growth should be back on track. Also, we anticipate standalone revenues
will grow at a CAGR of 19.2% during FY14-16E. Going ahead, we also
anticipate that the EBITDA margin will improve 20 bps to 10.8% during
FY14-16 due to higher proportion of revenues from the high margin
mining segment. Consequently, we expect SEL’s net income to grow at a
CAGR of 10.3% during FY14-16E despite higher depreciation charges. On
a cash profit basis, we anticipate 19.1% CAGR during FY14-16E.
SEL remains our top pick in sector…
SEL remains our top pick in the sector on the back of a strong order book
providing revenue visibility, well funded equity for BOT projects portfolio,
strong execution track record and better earnings growth. We maintain
our BUY recommendation with an SOTP based target price of | 265. We
have valued SEL’s 80% stake in SIPL (BOT subsidiary) at | 160.9/share
and construction business at | 104/share (at 7x FY16 EV/EBITDA).


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Sadbhav Engineering, On track to execution:: Business Line

Sadbhav Engineering :: 4QFY2012 Result Update :: Angel Broking

For 4QFY2012, Sadbhav Engineering (SEL) reported a mixed set of numbers, with
revenue coming marginally higher than our estimates while earnings coming in
lower than our expectations. SEL had an order inflow of `2,844cr (majority
contribution by the two recent road BOT projects) during FY2012, taking its order
book to `7,554cr (2.8x FY2012 revenue), which provides good revenue visibility.
We maintain our Buy view on the stock.

Hold Sadbhav Engineering ; Target : RS 166 : ICICI Securities PDF link

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http://content.icicidirect.com/mailimages/ICICIdirect_SadbhavEngineering_InitiatingCoverage.pdf


A c c e l e r a t i n g   o n   f a s t   l a n e …
Sadbhav Engineering (SEL) is an infrastructure developer and EPC player
with a reputation of  timely completion of projects. SEL holds varying
stakes in nine BOT projects aggregating | 7859 core (equity requirement -
| 1011 crore through its subsidiary (SIPL) for which funding (both equity
and debt) has largely been tied up. Once operational, we anticipate SEL’s
consolidated toll revenues will grow exponentially to | 1.7 crore/day
supporting SEL’s consolidated cash profit growing 2.3x to | 345 crore
during FY11-14E. Additionally, post emerging L-1 bidder for | 1280 crore
project from NHAI, we anticipate SEL’s order book will increase to | 6466
crore, 2.6x order book to bill ratio (on a TTM basis) lessening concerns
over revenue visibility.

Sadbhav Engineering: Benchmark for excellence!: MSFL research

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Sadbhav Engineering, now an integrated road sector player with a portfolio of nine BOT road projects (2,403 lane km worth ` 80bln on gross cost) has consistently been ahead of its industry peers on addition of projects in times of low competitive intensity, capital management, completion of projects ahead of schedule & disciplined bidding thereby providing bandwidth in terms of capital & execution for any attractive opportunities that may come by. We believe the company offers a better risk-reward compared to its peers on aspects like project funding, order-book mix (internal/external), execution capability and working capital management. Its robust EPC potential from internal (road projects) and external (roads, mining & irrigation) orders strengthens our investment thesis. Sadbhav Engineering remains our top pick in the sector. We recommend buy with a price target of ` 186.
Focus on execution; to achieve COD well ahead
Sadbhav Engineering for the past year and a half has focussed on execution of its 4 BOT road projects won in FY10 & FY11. The management’s strategy of concentrating on construction has yielded results with Sadbhav expected to achieve COD 3-6 months ahead of schedule This not only makes Sadbhav eligible for bonus but also enables it to toll for higher duration to the extent of early completion
Ahead of curve in a dynamic & challenging environment
We like the management’s ability to see through the sector dynamics and being a step ahead of its peers in the industry. It is amply demonstrated by the milestones achieved. Better capital management, focus on execution & conservative bidding strategy in recent past has comfortably positioned the company with respect to funding & execution bandwidth.
Orderbook concerns weigh down on stock; confident of its 3rd party EPC capabilities
As on Dec’11, the order book stands at ` 59.4bln.Captive road BOT’s order contribute 28%. With execution of captive orders expected to be completed in FY13 & a dismal order inflow in 9M1F12, the EPC growth concerns has weighed down on the stock. We are confident of Sadbhav’s 3rd party EPC capabilities since the company has EPC capabilites across three segments of Road, Irrigation & Mining.
Valuation; Top pick in the sector
With strong EPC capability across multiple sectors & scale, higher capital efficiency and timely completion of its BOT assets Sadbhav Engineering remains our top pick. We maintain Buy with a PT of ` 186. We have valued the EPC entity at ` 86.1/share on the basis of 9x FY13P earnings whilst the BOT projects contribute ` 96.2/share (52%) based on a FCFE approach and one time early completion bonus of ` 3.6/share.

Sadbhav Engineering: Buy: Business Line,

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The past six months has seen the stock of Sadbhav Engineering slip 29 per cent, leaving it at an attractive level for investors with a three-to-five year perspective. Buoying prospects are Sadbhav's strong order book, healthy growth in toll collections from road projects, a good track record of completing projects well ahead of time, earning it early-completion bonuses and consistent growth in revenues and profits.

Sadbhav has nine road projects on a build-operate-transfer basis, of which three are operational. Three more are set to be complete by the end of this fiscal, all of which are ahead of the expected completion date. Road projects constitute 71 per cent of the order book, irrigation projects form 17 per cent, with the rest coming in from mining.

At Rs 103, the stock trades at a PE multiple of 11.5 times the trailing 12-month earnings and 9.6 times the estimated earnings for 2012-13. While at a premium to other road construction/infrastructure companies such as Ashoka Buildcon, Sadbhav has managed better earnings growth.

STRONG ORDER BOOK

Order inflow in the first half of this fiscal has been sedate; outstanding orders at end-September '11 stood at Rs 6,259 crore against Rs 6,956 crore at end-March '11. Even so, the current order book is a good 2.9 times the revenues for FY-11, which will help Sadbhav tide over the tepid inflow of road projects.

New orders in the June quarter were in irrigation projects, with Rs 212 crore likely to flow in by the end of this fiscal.

Sadbhav has bids worth over Rs 2,000 crore in the mining space and Rs 1,139 crore in irrigation projects, though these may not all be won by the company. Awarding of road projects has recently begun to pick up, with the company securing a Rs 101 crore project in the September '11 quarter.

TOLL REVENUE GROWTH

Sadbhav has a combination of pure construction as well as developer contracts in roads. Of its nine BOT road projects, two have been operational for the past two years. Toll revenues from these two have been clocking steady growth.

In 2010-11, revenues grew 36 per cent, while the June '11 quarter saw toll revenues grow 22 per cent. Traffic on these roads has also risen a good 13-15 per cent, auguring well for sustained toll income. Its third BOT project turned operational in 2010-11.

With three more projects scheduled to turn revenue-generating in the next financial year, toll revenues are set to increase. Successful completion of large-scale projects will help improve Sadbhav's technical and financial qualification for larger contracts.

CONSISTENT EARNINGS GROWTH

Revenues grew at a compounded annual rate of 36 per cent over the past three years, while net profits expanded 23 per cent in the same period. For the six months ending September '11, revenues rose 52 per cent and net profits 32 per cent. Sadbhav has managed consistent revenue and profit growth over the past several quarters unlike peers. Projects have not been stalled due to problems with land or funds. The company has focused on a small number of high-value projects, has a degree of diversification in order book and has maintained its working-capital cycle.

Execution of road BOT contracts is undertaken by Sadbhav itself, leading to better margins. Irrigation projects, which inherently have higher margins than road projects, have helped Sadbhav maintain operating margins well above 10 per cent over the past several years. For 2010-11, operating margins stood at 16 per cent, though higher labour and material costs have brought margins down to 12 per cent for the six months ending September '11. Margins are still on a par with peers.

Further, according to the company, it will receive Rs 100 crore in bonus spread over the current fiscal and the next for the early completion of two road projects. Though this is a one-time income, Sadbhav has completed most of its projects ahead of the scheduled time, and could well do the same for its other projects as well.

The bonus could give Sadbhav a reprieve from interest costs, which currently take up about 4 per cent of revenues. Interest and depreciation together have resulted in net margins at 4 per cent, despite the high operating margins. With three more projects becoming operational in the next fiscal, debt could also reduce in conjunction with a rise in revenues. Consolidated debt-to-equity at end-March '11 stood at two times, though current interest cover is at a satisfactory 4.3 times.

Sadbhav Engineering ::Ambit India Access, December 2011

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Sadbhav Engineering
Sadbhav’s stock price has risen 26% over the last two years whilst all other
infrastructure/construction company’s stock prices have fallen 25-80%.
This superlative performance can be attributed to Sadbhav’s: (a) superior
accounting quality; (b) continuing strength in cost competitiveness; and (c)
well funded infra BOT assets. Industry leading 44% CAGR in revenues and
steady net margins over FY09-11 signify the importance of well-managed
balance sheet for delivering profitable growth.
Company Background
Incorporated in 1988, Sadbhav Engineering (SEL) is an Engineering, Procurement
and Construction (EPC) company catering to the roads/highways, mining and
irrigation sectors. SEL also has an infrastructure asset portfolio of four operational
road projects and five under construction road projects under its subsidiary
Sadbhav Infrastructure Pvt Ltd (SIPL). Sadbhav Engineering holds 78% stake in its
BOT asset portfolio subsidiary.
Recent Financial Performance
SEL posted strong performance in 1HFY12, as stand-alone revenues grew by 52%
(YoY) and stand-alone PAT grew by 32% (YoY). However, due to decline in EBITDA
margin (114bps YoY decline) in 1HFY12, PAT growth was lower than the revenue
growth. We highlight that SEL has a strong balance sheet, as unlike other
construction companies which are suffering from high debt:equity, Sadbhav’s
stand-alone debt:equity is 0.6x at the end of Sept-11 (industry average ~1.0x) .
Outlook
Sadbhav’s superior cost competitiveness coupled with relatively low debt: equity
should enable it to bid competitively against peers who are capital starved and are
reeling under rising financial cost pressures as visible from their highly leveraged
balance sheets consuming large proportion of EBITDA for debt servicing. The stock
(including embedded value) is presently trading at 11.5X FY13 one year-forward
earnings which are a 36% premium to its construction peers. This premium is
clearly warranted given Sadbhav’s superior cash flow generation profile, no
immediate equity dilution risks and a strong balance sheet.

Sadbhav Engineering :: 2QFY2012 Result Update :: Angel Broking

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For 2QFY2012, Sadbhav Engineering’s (SEL) numbers came in ahead of our and
street expectations. Order inflow for the quarter was at dismal `101cr as
expected, but order book remains healthy at `6,259cr (2.8x FY2011 revenues).
We believe SEL has performed better than its peers on the bourses and would
continue to do so owing to 1) consistent quarterly growth on the earnings front
unlike its peers which are marred by various headwinds; 2) better management of
its finances with one of lowest leveraged balance sheet (standalone) despite a
healthy portfolio of BOT assets; and 3) robust order book which lends revenue
visibility. Hence, we maintain our Buy rating on the stock and as our top pick.
Strong quarterly performance: SEL reported strong 65.0% yoy growth on the
top-line front to `430.4cr (`260.9cr) vs. our estimate of 48.0% growth. SEL has
been able to maintain a sturdy execution pace for captive road BOT projects since
the last few quarters, leading to robust revenue growth. On the margin front, the
company posted EBITDAM of 10.5% (12.0%), below our estimate of 11.3% mainly
due to commodity price pressures. Interest cost stood at `15.4cr (`9.0cr),
registering a jump of 70.9% yoy/22.5% qoq on account of rising interest rates.
On the earnings front, SEL reported 32.1% growth yoy to `18.1cr (`13.7cr),
higher than our expectation of `16.9cr on account of higher top-line growth.
Outlook and valuation: SEL’s management expects the current intense
competition to subside in couple of quarters, however denting the order inflow
target for the fiscal. We believe that given SEL’s strong execution capabilities,
healthy balance sheet, increasing opportunities on road front and expected
rationality in bidding process would ensure consistent order inflows for company
in FY2013 and hence investors should not be wary of slowdown on order inflow
front on quarterly basis. Our SOTP-based target price works out to `165/share,
implying a 25.7% upside from current levels, based on a target P/E multiple of 9x
to its FY2013E earnings and valuing its BOT arm on DCF basis. Thus, we
maintain our Buy view on the stock and as one of our top picks in the sector.

Sadbhav Engineering: Strong revenues; but margin decline and high interest cost mar net-level results: Kotak Sec,

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Sadbhav Engineering (SADE)
Construction
Strong revenues; but margin decline and high interest cost mar net-level results.
Sadbhav Engineering reported strong revenue of Rs4.3 bn (up 65% yoy) in line with our
estimate. However lower-than-expected EBITDA margin at 10.5% (down 150 bps yoy,
our estimate of 11%) and high interest cost (of Rs154 mn, up 22% qoq) led to a miss
at the net PAT level (reported Rs181 mn, 21% below estimate). Key things to watch for
are order inflows (BOT, cash construction) so as to maintain growth momentum post
sedate inflows in FY2012E so far. Retain BUY (TP: Rs180/share).

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.

Sadbhav Engineering: FY2011 annual report ::Kotak Sec,

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Sadbhav Engineering (SADE)
Construction
FY2011 annual report. Key highlights include (1) strong balance sheet quality with
low leverage (net debt:equity of 0.5X) and working capital improvement (down to 65
days of sales at end-FY2011 from 84 days), (2) execution of several orders in JV with
GKC (possible reasons: aided prequalification, subcontracting, reduced individual
project risk), and (3) incremental inflows remain key (relatively low order
announcements in FY2012E so far, only Rs2 bn, versus full-year estimate of Rs36 bn).


Balance sheet quality remains exceptionally strong with low leverage, working capital improvement
Sadbhav Engineering’s balance sheet quality remains exceptionally strong with (1) low leverage—
net debt:equity of only 0.5X at end-FY2011, and (2) improvement in working capital (excluding
cash and L&A to subsidiaries) to 65 days of sales (from 85 days) on lower debtor levels. Other key
highlights are (1) generates strong operating cash of Rs2 bn on decline in loans and advances to
subsidiaries, (2) likely to have received Rs4 bn of PE investment from Xander Group and Norwest
Venture Partners (reflected in net worth of SIPL), and (3) records strong progress across most BOT
projects.
Executing several projects in JV with GKC; several possible reasons for the same
The company is executing several projects in a joint venture with GKC Projects Ltd—Hyderabad.
Most of the orders won in FY2011 were won in JV with GKC Projects. We are unsure of the
rationale behind the strategy of bidding for majority of the projects in JV. We venture that the
reasons could be (1) aid in prequalification, (2) subcontracting and (3) mitigating individual project
risk by having a partner etc.
Order inflows key to meet FY2013E estimates; momentum low so far versus FY estimates
We note that new order inflows is key to meet our FY2012E and FY2013E estimates for Sadbhav
with strong progress in the execution of the existing BOT projects. Our estimates build in order
inflow of Rs35 bn in FY2012E, a growth of about 45% over FY2011 inflows of Rs24 bn. However,
order inflows have remained relatively muted in FY2012E so far; the company has announced only
two EPC orders to the tune of about Rs2.2 bn.
Marginally revise estimates; reiterate BUY with a target price of Rs180/share
We have revised our earnings estimates to Rs10.8 and Rs11.9 from Rs9.8 and Rs10.9 for FY2012E
and FY2013E. We have reduced our order inflow estimates to Rs35 bn and Rs41 bn for FY2012E
and FY2013E versus earlier assumption of Rs41 bn and Rs46 bn leading to small reduction in
revenue and EBITDA estimate. However, lower interest expense on lower debt levels leads to a net
positive impact on the PAT line. We retain our BUY rating with an SOTP-based target price of
Rs180/share.

Sadbhav Engineering bags order worth `202cr :: Angel Broking,

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Sadbhav Engineering bags order worth `202cr
Sadbhav Engineering (SEL) has bagged a road project worth `201.8cr from Bihar State
Road Development Corporation Ltd., Patna. SEL will be implementing this project in a joint
venture with GKC Projects, with SEL’s share being 50%. We maintain our Accumulate view
on SEL with a target price of `161.

Sadbhav Engineering: Strong execution; order inflows to keep momentum going is key thing to watch:: Kotak Sec

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Sadbhav Engineering (SADE)
Construction
Strong execution; order inflows to keep momentum going is key thing to watch.
Sadbhav Engg reported strong revenue of Rs6.1 bn (up 44% yoy) versus our estimate of
Rs5.7 bn likely led by execution of large orders some of which may be completed
before time earning bonus as well. In-line margin (11.1%) led to net PAT of Rs338 mn
(up 32%) versus our estimate of Rs309 mn. Key things to watch for are order inflows
(BOT, cash construction) so as to maintain growth momentum post slightly sedate
FY2011 on this count. Revise estimates. Retain BUY with TP Rs180 (versus Rs190) on
slightly lower order inflow expectation versus earlier.


Revenue beat likely led by execution of BOT orders, several projects likely completed ahead of time
Sadbhav Engg reported strong revenue growth of 44% in 1QFY11 to Rs6.1 bn, significantly ahead
of our estimate of Rs5.7 bn. The strong growth was likely led by strong execution of large BOT
projects in the backlog of the company. The company is also likely to have benefitted from start of
execution of (1) Rs14 bn Rohtak-Panipat project (recently achieved appointed date) and (2)
possibly its Rs14 bn NHAI cash project. We build in yoy topline growth of 36% for FY2012E.
Margin in line with estimate, contacts 80 bps on higher construction and other expenses
Sadbhav reported EBITDA margin of 11.1%, and in line with our estimate of 11%. Margin
declined 80 bps yoy on higher construction (60 bps) and other expenses (40 bps) as a percent of
sales. The company reported a net PAT of Rs338 mn, up 32.2% yoy and 9.4% ahead of our
estimate of Rs309 mn primarily on account of higher-than-expected revenue growth.
Awards part of Rs14 bn NHAI cash project to KNR Construction; increasing focus on mining
Sadbhav recently sub-contracted part of its Rs14 bn NHAI cash project (2-laning of NH-69A and
NH-26B) to KNR Construction for Rs5.8 bn. KNR was awarded execution of the Madhya Pradesh
stretch (NH-26B). In a recent interview, the company has also highlighted its focus on expanding
portfolio of development projects by bidding for long-term mining contracts. The company has
recently submitted a bid to develop and operate SAIL’s Tasra coal block at Dhanbad. Sadbhav has
bid through a JV (74% share) with Godwari and Ispat, banking on its expertise in coal washeries.
Revise estimates on lower expectation on order inflows; retain BUY rating on strong execution
We revise estimates to Rs9.8 and Rs10.9 from Rs10 and Rs12.1 for FY2012E and FY2013E,
respectively, as we lower our order inflow assumption (Rs41bn and Rs46 bn from Rs48bn and
Rs54 bn for FY12E and FY2013E respectively). Our earlier assumption appeared aggressive in
context of Rs24 bn inflows in FY2011. We revise our TP to Rs180 (from Rs190) and retain BUY on
(1) strong execution and order book, (2) strong balance sheet and (3) funded BOT projects.


Revise estimates on lower expectation on order inflows; retain BUY
We assume Rs41 bn and Rs46 bn of orders for FY2012E and FY2013E versus earlier
assumption of Rs48 bn and Rs54 bn earlier on back of Rs24 bn order in FY2011. Our SOTPderived
target price of Rs180 (Rs190 earlier) is comprised of (1) Rs99 /share (Rs108 earlier)
from the construction business based on EV/EBITDA multiple of 5X on FY2013E EBITDA
estimate, and (2) Rs85/share from stake in SIPL.
We reiterate our BUY recommendation on the stock based on (1) relatively attractive
valuations, (2) strong order book, which provides near-term earnings visibility and (3)
positive long-term outlook for infrastructural investments. Key risks include (1) sensitivity to
base-year traffic and traffic growth assumptions, (2) margin pressures due to volatility
incommodity prices, (3) higher-than-expected interest costs, and (4) deterioration in working
capital parameters.

Sadbhav Engineering: Expect strong growth backed by execution of BOT projects :: Kotak Securities

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Sadbhav Engineering (SADE)
Construction
Expect strong growth backed by execution of BOT projects. Highlights from the
results conference call were (1) low margins attributed to higher irrigation revenues,
subcontracting, change in revenue recognition policy; we build about 10.25% margins,
(2) we expect subcontracting to decline in FY2012E (3) several project significantly (3-6
months) ahead of schedule and (4) we build in revenue growth of 36% in FY2012E.
Low working capital likely to remain as BOT contributes to major share of revenues.
Retain BUY with a revised target price of Rs190 (Rs175 earlier).

Sadbhav Engineering - Result Reviews ; Angel Broking,

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Sadbhav Engineering
Sadbhav Engineering (SEL) posted numbers that were much higher than our and street
expectations both on the top-line and bottom-line fronts. We are revising our estimates for
FY2012 and FY2013, given the higher-than-expected performance on the top-line front
and EBITDA margin pressure. We expect the company to log a CAGR of 13.9% and 10.3%
in the top line and bottom line, respectively, over FY2011–13 on the back of high base
created in FY2011. We believe SEL will take a breather to consolidate before the next leap.
At current levels, the stock is trading at valuations of 7.1x FY2013E EPS (adjusted for BOT
investments). We believe SEL has posted consistent growth over the last few quarters and is
appropriately rewarded on the bourses with great outperformance over its peers.
Hence, we recommend an Accumulate rating on the stock with a revised SOTP-based
target price of `161 (`171), given the recent sharp run up in the stock price and lower
growth expected going ahead.

Sadbhav Engineering: Blockbuster 4Q ends a consistent year on a positive note:: Kotak Sec,

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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.

Kotak Sec, : Buy Sadbhav Engineering- Strong results; in line to meet full-year estimates.

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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.

Buy Sadbhav Engineering– 3QFY2011; Target Rs. 173 -- Angel Broking

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Sadbhav Engineering– 3QFY2011 Result Update

Angel Broking maintains a Buy on Sadbhav Engineering with a Target Price of Rs. 173.

Sadbhav Engineering (SEL) reported impressive set of numbers for 3QFY2011,
which were above our estimates both on top-line and bottom-line front. We are
revising our estimates upwards for FY2011 and FY2012 given the higher-thanexpected
performance this quarter. We believe that SEL has performed
particularly well over the last few quarters in the roads and mining segment, as its
order book has increased to `7,280cr i.e. 4.1x FY2011E revenues, one of the
highest in industry. We maintain a Buy on the stock.