RESULTS REVIEW 3QFY19 17 FEB 2019 Sadbhav Engineering - 3QFY19...SADE has posted a decent execution recovery to Rs 9.3bn (in line with estimate) after a muted 1HFY19 which had witnessed

RESULTS REVIEW 3QFY19 17 FEB 2019

Sadbhav Engineering

BUY

HDFC securities Institutional Research is also available on Bloomberg HSLB <GO>& Thomson Reuters

Deal to be the pivot for re-rating SADE has posted a decent execution recovery to Rs

9.3bn (in line with estimate) after a muted 1HFY19

which had witnessed a 2% YoY revenue de-growth.

EBITDA came in line with guidance at 12%. APAT came

in 9% below estimate largely due to higher effective tax

rate of 20%.

Order inflows have remained muted during YTDFY19

(~Rs 31bn so far) led by a slowdown in NHAI’s

tendering activity. With ~Rs 280bn (~70% EPC) of NHAI

bids to be tendered before the election code of conduct

(in Feb-19, SEL expects to add ~Rs 20bn new orders.

~61% of the Rs 129bn order book has not contributed

to 3QFY19 execution. We have cut our 19/20E EPS by

10/4% to factor in the delay in 5 key projects (~Rs

46.7bn) with ~Rs 16.2bn to be started by Mar 19-end

and ~Rs 30.5bn to start from 1QFY20E. SEL highlighted

that SIPL’s projects monetization is expected to reach

closure soon and no significant delay is envisaged. This

shall alleviate liquidity concerns and lead to re-rating.

We maintain BUY with a reduced TP of Rs Rs 418/sh (vs

Rs 449 earlier).

Highlights of the quarter From 1QFY20E entire backlog will be under execution:

Jodhpur & Lucknow ring roads (~Rs 20bn) and Mumbai Nagpur (~Rs 16bn) have already started contribution from 4QFY19E onwards while Kim (Rs 16bn) is expected to start before FY19-end. Projects worth ~Rs 31bn are likely to receive appointed dates in 1QFY20E. We expect a 23% YoY revenue growth in FY20E.

SIPL deal to lead to a complete makeover: The SIPL deal is expected to culminate in a complete strategic shift at SEL, with more focus towards an asset light EPC play in addition to the availability of a ready platform for offering HAM projects in future. ~Rs 4.6bn of SIPL loans could be returned back leading to a further debt reduction (Rs 14.6bn currently) and give free hand for taking additional NHAI projects once bidding picks up.

Near term outlook: SEL will not be required to infuse capital in SIPL despite the ~Rs 9.9bn equity requirement as SIPLs own cashflows (~Rs 10bn over 3 years), MBCP undrawn limit (~Rs 3.5bn), recent arbitration receipt (~Rs 0.7bn) and credit facility with Piramal (~Rs 5.5bn) are sufficient to meet the same (even if there is a slight delay in completion of the deal). We remain constructive.

Financial Summary (Standalone)Year Ending March (Rs mn) 3QFY19 3QFY18 YoY (%) 2QFY19 QoQ (%) FY18 FY19E FY20E FY21E

Net Sales 9,255 8,394 10.3 6,906 34.0 35,051 38,350 46,987 52,192 EBITDA 1,108 1,056 4.9 834 32.9 4,152 4,564 5,544 6,054 APAT 563 618 (9.0) 383 46.9 2,206 2,465 2,792 3,116 Diluted EPS (Rs) 3.3 3.6 (9.0) 2.2 46.9 12.9 14.4 16.3 18.2 P/E (x)

12.7 11.4 10.1 9.0

EV / EBITDA (x)

10.3 8.6 6.9 6.2 RoE (%)

11.8 11.8 11.9 11.8

Source: Company, HDFC sec Inst Research

INDUSTRY INFRASTRUCTURE

CMP (as on 15 Feb 2019) Rs 163

Target Price Rs 418

Nifty 10,724

Sensex 35,809

KEY STOCK DATA

Bloomberg SADE IN

No. of Shares (mn) 172

MCap (Rs bn) / ($ mn) 28/395

6m avg traded value (Rs mn) 69

STOCK PERFORMANCE (%)

52 Week high / low Rs 415/162

3M 6M 12M

Absolute (%) (25.8) (39.4) (58.8)

Relative (%) (27.3) (34.0) (63.2)

SHAREHOLDING PATTERN (%)

Promoters 46.55

FIs & Local MFs 22.23

FPIs 16.48

Public & Others 15.60

Source : BSE

Parikshit D Kandpal, CFA [email protected] +91-22-6171-7317

Kunal Bhandari [email protected] +91-22-6639-3035

SADBHAV ENGINEERING : RESULTS REVIEW 3QFY19

Page | 2

Standalone Quarterly Financial (Rs mn) Particulars (Rs mn) 3QFY19 3QFY18 YoY (%) 2QFY19 QoQ (%) 9MFY19 9MFY18 YoY (%)

Net Revenues 9,255 8,394 10.3 6,906 34.0 25,276 24,768 2.1

Material Expenses (7,543) (6,777) 11.3 (5,492) 37.3 (20,469) (19,763) 3.6

Employee Expenses (163) (376) (56.7) (350) (53.5) (857) (1,091) (21.5)

Other Expenses (441) (184) 139.8 (230) 91.8 (937) (1,002) (6.5)

EBITDA 1,108 1,056 4.9 834 32.9 3,013 2,912 3.5

Depreciation (241) (247) (2.3) (244) (1.1) (726) (743) (2.3)

EBIT 867 809 7.1 590 46.9 2,287 2,168 5.5

Interest Cost (468) (452) 3.4 (433) 8.0 (1,334) (1,111) 20.1

Other Income (inc EO Item) 304 241 26.3 226 34.7 815 408 99.8

PBT 703 598 17.6 383 83.7 1,767 1,465 20.7

Tax (141) 20 (813.2) - - (187) 43 (535.0)

RPAT 563 618 (9.0) 383 46.9 1,580 1,508 4.8

EO Items (Adj For Tax) - - - - - - - -

APAT 563 618 (9.0) 383 46.9 1,580 1,508 4.8


Margin Analysis MARGIN ANALYSIS 3QFY19 3QFY18 YoY (bps) 2QFY19 QoQ (bps) 9MFY19 9MFY18 YoY (%)

Material Expenses % Net Sales 81.5 80.7 75.8 79.5 197.6 81.0 79.8 118.9

Employee Expenses % Net Sales 1.8 4.5 (272.0) 5.1 (330.9) 3.4 4.4 (101.5)

Other Ope. Expenses % Net Sales 4.8 2.2 257.5 3.3 143.7 3.7 4.0 (33.8)

EBITDA Margin (%) 12.0 12.6 (61.3) 12.1 (10.4) 11.9 11.8 16.5

Tax Rate (%) 20.0 (3.3) 2332.1 0.0 2002.1 10.6 (2.9) 1353.2

APAT Margin (%) 6.1 7.4 (128.5) 5.5 53.3 6.3 6.1 16.4


SEL has posted decent execution recovery (in line with estimate) after a muted 1HFY19 which had witnessed a 2% de-growth YoY

Finance cost (Gross) came in at Rs 468mn (+3%YoY, +8% QoQ) Other income (incl. Interest on subsidiary loans – Rs 177mn) came in at Rs 304mn (+26% YoY, +35% QoQ) Effective tax rate was ~20% (because of deferred tax charge of Rs 127.6mn against a MAT credit of Rs 74.1mn) APAT Rs 563mn (-9% YoY, +47% QoQ, 9% miss)


Page | 3

With a pick up in the Roads segment, share of Road orders have been growing Within the Roads vertical, captive BOT projects have been increasing on the back of new HAM projects Share of Roads in revenue has been increasing; Mining segment is stable and Irrigation has been highly volatile With HAM projects moving into execution, captive revenue share has gone up significantly This trend is likely to continue as further HAM projects move into execution over the next 3 months

Road’s Share In Order Book Has Been Growing Road Orders: Captive BOT (HAM) Increasing

Source: Company, HDFC sec Inst Research Source: Company, HDFC sec Inst Research

Road’s Share Of Revenue Increasing Captive BOT (HAM) Road Revenue Share To Go Up


0

20

40

60

80

100

120

140

160

1QFY

15

2QFY

15

3QFY

15

4QFY

15

1QFY

16

2QFY

16

3QFY

16

4QFY

16

1QFY

17

2QFY

17

3QFY

17

4QFY

17

1QFY

18

2QFY

18

3QFY

18

4QFY

18

1QFY

19

2QFY

19

3QFY

19

Transportation Irrigation MiningRs bn

-

20

40

60

80

100

120

1Q

FY1

5

2Q

FY1

5

3Q

FY1

5

4Q

FY1

5

1Q

FY1

6

2Q

FY1

6

3Q

FY1

6

4Q

FY1

6

1Q

FY1

7

2Q

FY1

7

3Q

FY1

7

4Q

FY1

7

1QFY

18

2Q

FY1

8

3Q

FY1

8

4Q

FY1

8

1Q

FY1

9

2Q

FY1

9

3Q

FY1

9

BOT/ HAM EPCRs bn

-

3

5

8

10

4Q

FY1

5

1Q

FY1

6

2Q

FY1

6

3QFY

16

4Q

FY1

6

1Q

FY1

7

2Q

FY1

7

3Q

FY1

7

4Q

FY1

7

1Q

FY1

8

2Q

FY1

8

3Q

FY1

8

4QFY

18

1Q

FY1

9

2Q

FY1

9

3Q

FY1

9

Transportation Irrigation MiningRs bn

-

1

2

3

4

5

6

7

8

9

10

1Q

FY1

6

2Q

FY1

6

3Q

FY1

6

4Q

FY1

6

1Q

FY1

7

2Q

FY1

7

3Q

FY1

7

4Q

FY1

7

1Q

FY1

8

2Q

FY1

8

3Q

FY1

8

4Q

FY1

8

1Q

FY1

9

2Q

FY1

9

3Q

FY1

9

BOT/ HAM EPC Rs bn


Page | 4

We expect SEL’s order book to multiply 1.2x over FY19-21E Roads, Mining and Irrigation segments shall be the key drivers of the order book FY19E is expected to see a dip in order intake as majority of the NHAI tenders will see activity only post elections Road’s vertical contributes about 78% to the order book, followed by Mining and Irrigation at 18% and 4%, respectively

Order Book To Multiply 1.2x Over FY19-21E EBIDTA Margin To Remain ~11.6-11.9% In FY19-21E


Inflows To Pick Up Post FY19 Order Book Mix: 3QFY19 (%)


1.0

2.0

3.0

4.0

5.0

6.0

-

30

60

90

120

150

180

210

FY

12

FY

13

FY

14

FY

15

FY

16

FY

17

FY

18

FY

19

E

FY

20

E

FY

21

E

Order Book (Rs mn) Revenues (Rs mn)

Order book/sales (x) - RHS

-

2

4

6

8

10

12

14

FY1

2

FY1

3

FY1

4

FY1

5

FY1

6

FY1

7

FY1

8

FY19

E

EBIDTA Margins (%) PAT Margins (%)

32

45

22 23

47 47

86

46

61

71

-

10

20

30

40

50

60

70

80

90

100

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY1

9E

FY2

0E

FY2

1E

Order Inflow (Rs bn)

Roads -

BOT/HAM

50%

Roads - EPC28%

Irrigation

4%

Mining

18%


Page | 5

Key Assumptions And Estimates

Key Assumptions Rs mn

FY19E FY20E FY21E Growth% Comments

FY19E FY20E FY21E

Closing order book

140,409 154,783 174,012 6.0 10.2 12.4 FY19E is expected to see a dip in order intake as majority of the NHAI tenders will see activity only post elections

Order book growth (%)

6.0 10.2 12.4

New order booking

46,267 61,361 71,420 (46.2) 32.6 16.4

Book to bill ratio 3.7 3.3 3.3

Book-to-bill ratio to remain stable

Total Revenue 38,350 46,987 52,192 9.4 22.5 11.1 We estimate 16.7% FY19-21E revenue CAGR

Growth (%) 9.4 22.5 11.1

EBIDTA 4,564 5,544 6,054 9.9 21.5 9.2

EBIDTA margin (%)

11.9 11.8 11.6 5.6 (10.0) (20.0) EBIDTA margins to remain around 11.6-11.9%, as new HAM orders have 100bps higher margins vs EPC orders

Depreciation 960 930 1,013 (1.9) (3.1) 8.9

Financial Charges 1,767 1,606 1,578 (7.4) (9.1) (1.7) Financial charges to ease off as SEL target debt reduction

PBT 3,598 4,106 4,583 66.4 14.1 11.6

PBT margin (%) 9.4 8.7 8.8 321.1 (64.2) 4.2 PBT margin expansion in line with EBIDTA expansion

Tax 540 1,314 1,467 (1,326.5) 143.5 11.6

Tax rate (%) 15.0 32.0 32.0

Tax rate to move higher in FY20E as MAT credit gets exhausted

APAT 2,465 2,792 3,116 11.7 13.3 11.6

Net margin (%) 6.4 5.9 6.0 13.2 (48.4) 2.9 Margins to reduce on higher taxation

Gross Block Turnover

4.7 5.3 5.4 (1.4) 12.1 2.4 Improvement on account of new orders’ inflow

Debtor days 138 132 132 (16.8) (4.3) 0.0

CFO - a 5,268 2,677 2,069

CFI - b 478 (118) 370

Annual capex to be limited to ~Rs 500mn

FCF - a+b 4,491 1,927 1,319

Strong FCF generation as growth picks up CFF - c (1,504) (3,347) (1,819)

Total change in cash - a+b+c

4,241 (788) 620

Source: HDFC sec Inst Research

We estimate 16.9% FY19-21E revenue CAGR EBIDTA margins to remain around 11.6-11.9%, as new HAM orders have 100bps higher margins vs. EPC orders SEL expects to bring down standalone debt by Rs 400-500mn debt by FY20E SEL is also expected to receive ~Rs 7.3bn mobilization advance at bank rate; this will also reduce WC demand


Page | 6

Outlook and valuation

Maintain BUY - Reduced TP of Rs Rs 418/sh (vs Rs 449 earlier)

Valuation methodology

We have valued SEL at 18x one-year forward Dec-20E EPS. Our investment premise is based on (1) Robust order book at 3.4x FY19E revenue, (2) Improving balance sheet (FY21E net D/E will improve to 0.36x from 0.79x end-FY18), (3) EBIDTA margins stable at ~11.6-11.9%. With provision of Rs 7.3bn mobilization advance to be received from projects under development, this could help SEL keep debt under control.

With management guiding that SIPL deal not likely to face any more significant delays and will likely see the light of the day soon, we could see significant debt reduction (with ~Rs 4.6bn of o/s loans from SIPL) as well as a ready platform for offering future HAM

projects. This will lead to SEL turning into a largely EPC focused company.

Government-led spends in the Infrastructure sector will continue to drive stock performance and SEL, with its strong credentials, will likely benefit from the pick-up in ordering activity. The company, over the past many years, has built strong pre-qualification in potentially large ordering segments such as Roads, Mining and Irrigation.

Reduced TP of Rs Rs 418/sh (vs Rs 449 earlier). We value the (1) Standalone EPC business at Rs 319/share (18x one-year forward Mar-20 EPS), and (2) SEL stake in SIPL at 20% holding company discount to current market capitalization at Rs 99/sh.

SOTP Valuation

Particulars Segments Value

(Rs mn) Value per share (Rs)

Rationale

Sadbhav Standalone Core construction business

54,637 319 At 18x Mar-20E EPS

SIPL stake Subsidiary 16,982 99 We have valued the 68.64% stake of SEL in SIPL by giving a 20% holding company discount to current market capitalization

Total 71,618 418


Change in Estimates Rs mn FY19E New FY19E Old % Change FY20E New FY20E Old % Change

Revenues 38,350 40,040 (4.2) 46,987 49,919 (5.9)

EBIDTA 4,564 4,765 (4.2) 5,544 5,890 (5.9)

EBIDTA Margins (%) 11.9 11.9 (0.0) 11.8 11.8 (0.0)

APAT 2,465 2,744 (10.2) 2,792 2,892 (3.5)


We value the standalone EPC business at Rs 319/sh (18x one-year forward Dec-20E EPS) We value SEL stake in SIPL at 20% holding company discount to current market capitalisation of SIPL at Rs 99/sh. Reduced TP of Rs Rs 418/sh (vs Rs 449 earlier) We have revised our estimates to factor in the delay in 5 key projects (~Rs 46.7bn) moving into execution with ~Rs 16.2bn to be started by Mar 19-end and ~Rs 30.5bn to start from 1QFY20E


Page | 7

Peer Set Comparison: Core EPC

COMPANY MCap

(Rs bn) CMP (Rs)

RECO TP

(Rs)

Adj. EPS (Rs/sh) P/E (x) EV/EBITDA (x) ROE (%)

FY19E FY20E FY21E FY19E FY20E FY21E FY19E FY20E FY21E FY19E FY20E FY21E

NCC 50.5 84 BUY 184 10.2 10.0 9.7 7.3 7.5 7.7 4.5 4.2 4.1 13.6 11.9 10.3

Dilip Buildcon 61.5 450 BUY 833 58.1 57.2 54.0 6.1 6.2 6.3 4.8 4.2 3.9 27.8 21.5 16.8

Sadbhav Engineering 28.1 163 BUY 418 14.4 16.3 18.2 4.5 4.0 3.6 4.8 3.9 3.4 11.8 11.9 11.8

PNC Infratech 35.1 137 BUY 305 7.7 13.6 14.1 10.8 6.1 5.4 6.1 4.1 3.4 10.2 15.7 14.0

Ashoka Buildcon 31.4 112 BUY 262 10.2 10.4 10.6 3.9 3.9 3.5 3.8 3.4 3.0 14.0 12.6 11.6

KNR Constructions 29.0 206 BUY 337 12.2 16.1 15.2 12.0 9.1 9.6 5.5 4.5 4.0 13.5 15.1 12.3

Ahluwalia Contracts 17.5 261 BUY 449 18.7 23.2 24.6 13.3 10.7 10.1 6.4 5.2 4.7 18.3 18.9 16.9

ITD Cementation * 17.7 103 BUY 188 8.3 10.5 10.4 12.4 9.8 9.9 5.9 5.8 5.5 16.7 15.3 13.2

Capacite Infra 13.0 192 BUY 352 15.1 18.2 24.1 11.3 9.9 7.4 4.6 3.7 2.9 12.9 13.8 15.9

PSP Projects 13.9 386 BUY 603 24.7 30.9 34.3 15.6 12.5 11.2 8.7 6.6 5.6 26.2 26.4 23.9

JMC Projects 15.1 90 BUY 175 7.4 8.1 8.4 8.8 8.1 7.7 5.3 4.6 4.2 14.6 13.9 12.8

HG Infra 11.9 183 BUY 408 20.1 25.6 26.7 8.5 6.7 6.1 4.2 3.4 3.1 21.6 22.1 18.8

J. Kumar Infraprojects 8.7 115 BUY 336 22.0 26.6 28.5 5.2 4.3 4.0 3.1 2.5 2.3 10.6 11.7 11.5

Average

9.2 7.6 7.1 5.2 4.3 3.8 16.3 16.2 14.6

Source: Company, HDFC sec Inst Research *ITD Cementation FY19E/FY20E should be read as 15MFY19E/FY20E


Page | 8

Income Statement (Standalone) Year ending March (Rs mn) FY17 FY18 FY19E FY20E FY21E

Net Revenues 33,203 35,051 38,350 46,987 52,192

Growth (%) 4.2 5.6 9.4 22.5 11.1

Material Expenses 26,552 28,134 31,294 38,294 42,536

Employee Expenses 1,366 1,553 1,074 1,692 1,879

Other Expenses 1,729 1,211 1,419 1,457 1,722

EBIDTA 3,556 4,152 4,564 5,544 6,054

EBIDTA (%) 10.7 11.8 11.9 11.8 11.6

EBIDTA Growth (%) 6.2 16.7 9.9 21.5 9.2

Depreciation 1,000 979 960 930 1,013

EBIT 2,556 3,172 3,603 4,614 5,041

Other Income (Incl EO Items) 875 897 1,761 1,098 1,120

Interest 1,534 1,907 1,767 1,606 1,578

PBT 1,897 2,162 3,598 4,106 4,583

Tax 18 (44) 540 1,314 1,467

RPAT 1,878 2,206 3,058 2,792 3,116

OCI/EO (Loss) / Profit (Net Of Tax) - - (593) - -

APAT 1,878 2,206 2,465 2,792 3,116

APAT Growth (%) 34.8 17.5 11.7 13.3 11.6

EPS 11.0 12.9 14.4 16.3 18.2

EPS Growth (%) 34.8 17.5 11.7 13.3 11.6


Balance Sheet (Standalone) As at March (Rs mn) FY17 FY18 FY19E FY20E FY21E

SOURCES OF FUNDS

Share Capital 172 172 172 172 172

Reserves 16,437 18,496 20,720 23,271 26,147

Total Shareholders Funds 16,609 18,668 20,891 23,443 26,318

Long Term Debt 3,062 2,863 2,262 762 762

Short Term Debt 14,709 11,984 13,088 13,088 12,838

Total Debt 17,771 14,847 15,350 13,850 13,600

Deferred Taxes (477) (994) (994) (994) (994)

Other Long Term Liabilities & LT Provs

98 83 83 83 83

TOTAL SOURCES OF FUNDS 34,001 32,604 35,330 36,382 39,007

APPLICATION OF FUNDS

Net Block 5,160 5,004 4,844 4,663 4,401

CWIP 69 23 - - -

Investments 5,694 5,775 6,275 6,725 6,725

Long Term Loans & Advances 316 351 356 372 372

Other Non-current Assets 631 563 563 563 563

Total Non-current Assets 11,801 11,693 12,038 12,324 12,061

Inventories 1,234 1,643 1,715 2,098 2,331

Debtors 16,651 15,922 14,500 16,993 18,875

Cash & Equivalents 230 126 4,367 3,579 4,199

ST Loans & Advances 5,065 6,531 5,043 5,149 5,720

Other Current Assets 4,678 6,773 5,253 5,793 6,435

Total Current Assets 27,857 30,995 30,879 33,612 37,559

Creditors 4,119 5,988 4,726 5,793 6,435

Other Current Liabilities 1,587 4,092 2,837 3,733 4,147

Short Term Provisions 20 27 23 28 31

Total Current Liabilities & Provns 5,725 10,107 7,586 9,554 10,613

Net Current Assets 22,131 20,888 23,292 24,058 26,946

TOTAL APPLICATION OF FUNDS 34,001 32,604 35,330 36,382 39,007



Page | 9

Cash Flow (Standalone) Year ending March (Rs mn) FY17 FY18 FY19E FY20E FY21E

Reported PBT 1,897 2,162 3,598 4,106 4,583

Non-operating & EO items (759) (800) (2,354) (1,098) (1,372)

Interest expenses 1,534 1,907 1,767 1,606 1,578

Depreciation 1,000 979 960 930 1,013

Working Capital Change (4,302) 3,008 1,837 (1,554) (2,266)

Taxes 235 (822) (540) (1,314) (1,467)

OPERATING CASH FLOW ( a ) (394) 6,434 5,268 2,677 2,069

Capex (322) (779) (777) (750) (750)

Free cash flow (FCF) (716) 5,655 4,491 1,927 1,319

Investments + Interest income 1,133 (773) 1,255 632 1,120

INVESTING CASH FLOW ( b ) 811 (1,552) 478 (118) 370

Share capital Issuance 2 - - - -

Debt Issuance 3,747 (2,924) 503 (1,500) -

Interest expenses (3,957) (1,907) (1,767) (1,606) (1,578)

FCFE (926) 824 3,227 (1,179) (259)

Dividend (145) (155) (241) (241) (241)

FINANCING CASH FLOW ( c ) (353) (4,986) (1,504) (3,347) (1,819)

NET CASH FLOW (a+b+c) 64 (104) 4,241 (788) 620

Closing Cash & Equivalents 230 126 4,367 3,579 4,199


Key Ratios (Standalone)

FY17 FY18 FY19E FY20E FY21E

PROFITABILITY (%)

GPM 20.0 19.7 18.4 18.5 18.5

EBITDA Margin 10.7 11.8 11.9 11.8 11.6

EBIT Margin 7.7 9.1 9.4 9.8 9.7

APAT Margin 5.7 6.3 8.0 5.9 6.0

RoE 11.3 11.8 11.8 11.9 11.8

Core RoCE 9.0 12.1 12.4 12.0 12.2

RoCE 10.0 12.8 11.3 10.7 13.0

EFFICIENCY

Tax Rate (%) 1.0 (2.0) 15.0 32 32

Asset Turnover (x) 5.0 4.8 4.7 5.3 2

Inventory (days) 14 17 16 16 16

Debtors (days) 183 166 138 132 132

Other Current Assets (days) 118 148 107 85 85

Payables (days) 45 62 45 74 74

Other Current Liab (days) 19 44 28 30 30

Cash Conversion Cycle (days) 250 225 188 129 129

Debt/EBITDA (x) 5.0 3.6 3.4 2.5 2.2

Net D/E 1.1 0.8 0.5 0.4 0.4

Interest Coverage 1.7 1.7 2.0 2.9 3.2

PER SHARE DATA

EPS (Rs/sh) 11.0 12.9 14.4 16.3 18.2

CEPS (Rs/sh) 19.1 21.1 22.7 24.7 27.4

DPS (Rs/sh) 1.1 1.2 1.2 1.2 1.2

BV (Rs/sh) 96.8 108.8 121.8 136.7 153.4

VALUATION

P/E 15.0 12.7 11.4 10.1 9.0

P/BV 1.7 1.5 1.3 1.2 1.1

EV/EBITDA 12.8 10.3 8.6 6.9 6.2

OCF/EV (%) (0.9) 15.0 13.5 7.0 5.5

FCF/EV (%) (1.6) 13.2 11.5 5.0 3.5

FCFE/Market Cap (%) (3.3) 2.9 11.5 (4.2) (0.9)

Dividend Yield (%) 0.7 0.7 0.7 0.7 0.7



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Rating Definitions

BUY : Where the stock is expected to deliver more than 10% returns over the next 12 month period

NEUTRAL : Where the stock is expected to deliver (-)10% to 10% returns over the next 12 month period

SELL : Where the stock is expected to deliver less than (-)10% returns over the next 12 month period

Date CMP Reco Target

12-Apr-18 398 BUY 445

14-Apr-18 399 BUY 445

31-May-18 349 BUY 438

10-Jul-18 280 BUY 438

16-Aug-18 271 BUY 436

11-Oct-18 208 BUY 375

16-Nov-18 221 BUY 423

10-Jan-19 227 BUY 449

17-Feb-19 163 BUY 418

150

200

250

300

350

400

450

Feb

-18

Mar

-18

Ap

r-18

May

-18

Jun

-18

Jul-

18

Au

g-18

Sep

-18

Oct

-18

No

v-18

De

c-18

Jan

-19

Feb

-19

Sadbhav TP

RECOMMENDATION HISTORY


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Documents

RESULTS REVIEW 3QFY19 17 FEB 2019 Sadbhav Engineering - 3QFY19...SADE has posted a decent execution recovery to Rs 9.3bn (in line with estimate) after a muted 1HFY19 which had witnessed