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8/3/2019 Sadbhav Engineering Result Updated
1/14
Please refer to important disclosures at the end of this report 1
Y/E March (` cr) 3QFY12 3QFY11 % chg (yoy) 2QFY12 % chg (qoq)Net sales 723.7 476.2 52.0 430.4 68.1Operating profit 75.2 52.9 42.3 45.3 66.1
Net profit 41.7 26.4 58.1 18.1 129.9Source: Company, Angel Research
For 3QFY2012, Sadbhav Engineering (SEL) reported another set of strong
numbers, marginally ahead of our expectations (highest on street) and way ahead
of street estimates. Order inflow for 9MFY2012 stood at `742cr, order book
remained decent at `5,940cr (2.7x FY2011 revenue). We are revising our toll
collection estimates for Ahmedabad Ring Road and Aurangabad Jalna projects.Also, we are factoring in lower interest cost for FY2013E as per managements
guidance. We remain positive on the stock, however owing to the recent run-up inthe share price, we recommend Accumulate on the stock. Strong quarterly performance: SEL reported robust top-line growth of 52.0% yoyto `723.7cr, in-line with our estimate of `714.3cr (consensus estimate of `630cr).
SEL has been able to maintain a sturdy execution pace for captive road BOT
projects since the past few quarters, leading to robust revenue growth. On the
margin front, the company posted EBITDAM of 10.4% (11.1%), marginally lower
than our estimate of 10.7%. The only surprise came on the interest cost front, as it
stood at `10.6cr (`9.7cr), registering a decline of 31.3% on a sequential basis
and lower than our estimate of `16.8cr. On the earnings front, SEL reported58.1% growth yoy to `41.7cr, above our expectation of `38.9cr (consensus
~`31.0cr) due to higher top-line growth and lower interest cost.Outlook and valuation: SEL believes that there are already signs of reducingcompetition in the road BOT space, evident by the lower number of participants in
the recent bidding of projects. Moreover, as per management, road BOT space
will offer 70-80 projects in the next 15 months, implying some share of the pie for
all players. Further, with a decent order book in hand, the company is
concentrating more on improving the quality of earnings and maintain its PAT
margins. Our revised SOTP-based target price works out to `157/share(`150/share), implying an 11.2% upside from current levels,based on a targetP/E multiple of 9x to its FY2013E earnings and valuing its BOT arm on FCFEbasis.Hence, we recommend Accumulate on the stock.Key financials (Standalone)Y/E March (` cr) FY2010 FY2011 FY2012E FY2013ENet sales 1,257 2,209 2,602 2,585% chg 17.0 75.8 17.8 (0.7)
Adj. net profit 54 120 139 138% chg (28.6) 122.1 16.2 (1.0)
EBITDA (%) 11.0 10.2 10.4 10.6
FDEPS (`) 3.6 8.0 9.3 9.2P/E (x) 39.3 17.7 15.2 15.4
P/BV (x) 5.4 3.4 2.8 2.2
RoE (%) 14.7 23.5 20.0 16.0
RoCE (%) 16.4 21.3 20.4 17.6
EV/Sales (x) 2.0 1.1 1.0 0.9
EV/EBITDA (x) 18.1 10.8 9.5 8.8
Source: Company, Angel Research
ACCUMULATECMP `141
Target Price `157
Investment Period 12 Months
Stock Info
Sector
Bloomberg Code
Shareholding Pattern (%)
Promoters 47.5
MF / Banks / Indian Fls 29.4
FII / NRIs / OCBs 20.5
Indian Public / Others 2.6
Abs. (%) 3m 1yr 3yr
Sensex 0.8 (1.7) 90.4
Sadbhav 5.2 39.9 332.9
1
17,7075,362
SADE.BO
SADE@IN
2,125
0.6
154/94
44,864
Infrastructure
Avg. Daily Volume
Market Cap (` cr)
Beta
52 Week High / Low
Face Value (` )
BSE SensexNifty
Reuters Code
Shailesh Kanani022-39357800 Ext: 6829
Nitin Arora022-39357800 Ext: 6842
Sadbhav EngineeringPerformance Highlights
3QFY2012 Result Update | Infrastructure
February 6, 2012
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Sadbhav Engineering | 3QFY2012 Result Update
February 6, 2012 2
Exhibit 1:3QFY2012 performance
Y/E March (` cr) 3QFY12 3QFY11 % chg (yoy) 2QFY12 % chg (qoq) 9MFY12 9MFY11 % chgNet sales 723.7 476.2 52.0 430.4 68.1 1,767.0 1,162.5 52.0Total expenditure 648.5 423.3 53.2 385.1 68.4 1,578.7 1,027.5 53.6Operating profit 75.2 52.9 42.3 45.3 66.1 188.3 134.9 39.5OPM (%) 10.4 11.1 (70)bp 10.5 (10)bp 10.7 11.6 (90)bp
Interest 10.6 9.7 9.1 15.4 (31.3) 38.6 17.1 126.0
Depreciation 6.9 6.8 0.1 7.0 (2.2) 20.8 20.0 4.2
Non operating income 4.6 4.3 6.6 5.2 (12.9) 11.4 1.8 518.1
Non-recurring items - - - - - - - -
Profit Before Tax 62.4 40.6 53.6 28.1 121.8 140.4 99.8 40.7Tax 20.6 14.2 45.1 10.0 107.0 46.7 34.1 36.9
Reported Profit After Tax 41.7 26.4 58.1 18.1 129.9 93.7 65.7 42.6PAT (%) 5.8 5.5 30bp 4.2 160bp 5.3 5.6 (30)bp
EPS (`) 2.8 1.8 58.1 1.2 129.9 6.2 4.4 42.6Source: Company, Angel Research
Exhibit 2:Actual vs. Estimates
Particulars (` cr) Estimates Actual Variation (%)Revenues 714.3 723.7 1.3
EBITDA 76.4 75.2 (1.6)
Interest 16.8 10.6 (37.0)
Tax 18.7 20.6 10.6
PAT 38.9 41.7 7.4Source: Company, Angel Research
Stellar performance on the revenue front continues
SEL reported robust 52.0% yoy growth on the top-line front to `723.7cr, in-line
with our estimate of `714.3cr (consensus estimate of `630cr). SEL has been able
to maintain a sturdy execution pace for captive road BOT projects since the past
few quarters, leading to robust revenue growth. Revenue from the road segment
contributed 90.2% to the total revenue, followed by the mining (8.3%) and
irrigation (1.5%) segments. During the quarter, SEL added only one mining project
worth `325cr, taking its total order inflow for 9MFY2012 to `742cr. SELs current
outstanding order book stands at `5,940cr (2.7x FY2011 revenue).
Currently, the bid pipeline for SEL is eight projects in the road segment worth
~`9,000cr, four projects in irrigation worth ~`1,250cr and six in mining worth
~`2,800cr. Management is confident of good conversion from the same, but we
remain conservative given the current slowdown faced by the economy and expect
sizeable action in FY2013 only.
Operational BOT Projects Toll collection
On the toll collection front, SEL reported 19.1% yoy growth for Ahmedabad Ring
road project to `20.9cr (`17.5cr) and 14.4% yoy growth for Aurangabad Jalna
project to `7.3cr (`6.3cr). As per management, these projects have witnessedtraffic growth of 6.9% and 13.1% for Ahmedabad Ring road and Aurangabad
Jalna project, respectively, on a yoy basis.
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Sadbhav Engineering | 3QFY2012 Result Update
February 6, 2012 3
Exhibit 3:Strong revenue performance as expected
Source: Company, Angel Research
Exhibit 4:Road segment Lions share of overall revenue (%)
Source: Company, Angel Research
Projects update
Dhule Palesnar project: SEL has already completed 75% of the projects (100%expected by March 2012) and achieved provisional COD and is expecting to start
collecting toll in the next few days. Further, management is expecting an average
toll collection of `35-36 lakhs/day for the project.
Nagpur Seoni project: As per management, SEL has not received annuity paymentin FY2012 for the project. Out of the total project length of 56km, COD has been
declared for 36km and for the balance 20km land acquisition is remaining.
Further, SEL does not wish to relinquish the project and has proposed to NHAI to
give the balance project to SEL once land is acquired (even 1-1.5 years down
the line).
Maharashtra border check post project: SEL has possession of 12 check posts, outof the total 22 check posts; and possession of additional four check posts is
expected by June 2012. SEL expects to commission the first check post in February
2012 and three more by March 2012.
Chhindwara project (Cash contract): Environmental clearance for the project hasbeen received. SEL has started work on this project, however the company is
expecting revenue of only`70cr-80cr in 4QFY2012, and the project will attain full
swing in 1QFY2013 (revenue of ~`200cr expected). This project has got ~20%price escalation and, hence, the revised TPC stands at ~`1,700cr (previously
`1,411cr).
Savings on BOT projects
As per management, under-construction captive road BOT projects will witness cost
savings (Bijapur Hungund `115cr, MBCP `150cr-170cr, Dhule Palasner `30cr-40cr
and Rohtak Panipat `100cr-120cr), owing to early completion of projects (lower
interest during construction, contingency reserve and debt service reserve account).
These savings would definitely be positive for the company. However, we are notfactoring in these savings currently and would wait for actual numbers before
incorporating the same in our model.
51.7
22.9
10.514.519.9
11.4 14.7
42.1 40.851.2
128.9
44.1
65.0
52.0
-
20.0
40.0
60.0
80.0
100.0
120.0
140.0
0
200
400
600
800
1000
1200
2QFY09
3QFY09
4QFY09
1QFY10
2QFY10
3QFY10
4QFY10
1QFY11
2QFY11
3QFY11
4QFY11
1QFY12
2QFY12
3QFY12
Sales (` cr, LHS) Growth (yoy %, RHS)
8672 78 77
81 75
11
14 6 10 9 14
314 16 13
10 11
-
10
20
30
40
50
60
70
80
90
100
FY2008 FY2009 FY2010 FY2011 FY2012E FY2013E
Road BOT Irrigation Mining
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Sadbhav Engineering | 3QFY2012 Result Update
February 6, 2012 4
Exhibit 5:Status of under-construction projects as of 3QFY2012
Project Work comp. Work rem. Sch. COD Expected COD Early completion Execution Debt Int. Rate(`cr) (` cr) (In months) (3QFY12) (9MFY12) (%)
Dhule Palasner 1,107.2 113.8 17-Jun-12 *15-Dec-11 6 130.6 695.0 11.75MBCPNL 368.0 466.0 - - - 154.6 407.0 12.75
Rohtak Panipat 327.7 625.3 Oct-13 *1-Dec-12 11 149.2 271.0 12.25
Bijapur Hungund 947.6 77.4 3-Mar-13 *15-Feb-12 13 180.3 695.0 10.50
Hyderabad Yadgiri 266.4 132.4 10-May-12 31-Mar-12 1 23.5 228.0 12.75
Total 3,017.0 1,414.8 638.3 2,296.0Source: Company, Angel Research, Note: * 75% completion expected by management, which will lead to early COD
Stable EBITDAM and int. cost lead to robust earnings growth
On the margin front, the company posted EBITDAM of 10.4% (11.1%), marginally
lower than our estimate of 10.7%. The only surprise came on the interest costfront, as it stood at `10.6cr (`9.7cr), registering a decline of 31.3% on a sequential
basis and lower than our estimate of `16.8cr. The companys interest cost has
declined due to 1) reduction in interest rate by 100-150bp for interest charged by
working capital lenders on account of improvement in credit rating and 2) bank
guarantee charges decreasing due to change in policy by the company of paying
for petroleum products by advance cash instead of credit. Further, management
expects the debt level and interest cost to reduce going ahead and, hence, we are
factoring in interest cost of `48cr (previous estimate `53cr) for FY2013.
On the earnings front, SEL reported 58.1% growth yoy to `41.7cr, higher than our
expectation of `38.9cr (consensus estimate of ~`31.0cr) on account of highertop-line growth and lower-than-expected interest cost.
Exhibit 6:EBITDAM lower than estimate
Source: Company, Angel Research
Exhibit 7:Stable EBITDAM and interest cost -> PAT growth
Source: Company, Angel Research
9.310.1
9.0
11.411.1
9.1
11.911.912.011.1
8.7
11.110.510.4
-
2.0
4.0
6.0
8.0
10.0
12.0
14.0
-
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
2QFY09
3QFY09
4QFY09
1QFY10
2QFY10
3QFY10
4QFY10
1QFY11
2QFY11
3QFY11
4QFY11
1QFY12
2QFY12
3QFY12
EBITDA (` cr, LHS) EBITDAM (%, RHS)
2.6
4.8
7.3
6.0
2.0
4.53.9
6.05.3 5.5 5.2
5.5
4.2
5.8
-
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
0.0
10.0
20.0
30.0
40.0
50.0
60.0
2QFY09
3QFY09
4QFY09
1QFY10
2QFY10
3QFY10
4QFY10
1QFY11
2QFY11
3QFY11
4QFY11
1QFY12
2QFY12
3QFY12
PAT (` cr, RHS) PATM (%, RHS)
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Sadbhav Engineering | 3QFY2012 Result Update
February 6, 2012 5
Bonus of`100cr to come over FY2012-13 for SELs parent
As per management, SELs parent will receive `100cr bonus as its share for the
early completion of the two projects (Bijapur Hungund and Dhule Palesnar) during
FY2012 (`18cr) and FY2013 (`82cr). This bonus (75% of toll collection) is payable
to EPC contractors (SEL and other sub contractors) for early completion of the
project and is applicable from 75% completion of project (toll collection starts post
75% completion) till the scheduled completion date. We have accounted this bonus
amount (one time income) under other income for SELs parent in FY2012 (`18cr)
and FY2013 (`82cr). It should be noted that this bonus amount is adjusted from
total earnings while assigning a PE multiple, for valuing its parent business, and
calculating our SOTP target price.
Equity requirement for BOT projects
SELs subsidiary, SIPL has a total equity requirement of ~`840cr for its nine BOT
projects in its portfolio, of which the company has already invested `660cr. For the
balance `180cr, SIPL can utilize unsecured loan (~`105cr) given to various
subsidiaries, expected generation of `40cr-45cr cash from Maharashtra Border
Check Post project and sanctioned loan from ICICI Bank of `180cr. Hence, SIPL
sits on a very comfortable position for the balance equity funding requirement for
its BOT projects.
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Sadbhav Engineering | 3QFY2012 Result Update
February 6, 2012 6
Outlook and valuation
We are revising our toll collection estimates upwards for Ahmedabad Ring
Road and Aurangabad Jalna projects on account of continued robust
performance on the projects. Also, we are factoring in lower interest cost for
FY2013E as per managements guidance and our revised interest cost stands
at `48cr from `53cr previously owing to this, our PAT estimate now stands at
`138cr from `134cr for FY2013E.
Exhibit 8:Change in estimates
FY2012 FY2013(` cr) Earlier Estimates Revised Estimates Variation (%) Earlier Estimates Revised Estimates Variation (%)Revenue 2,602 2,602 - 2,585 2,585 -
EBITDA 270 270 - 273 274 -
EBITDAM (%) 10.4 10.4 - 10.6 10.6 -
Interest 54 54 - 53 48 (9.1)
APAT 139 139- 134 138 2.4
EPS (`) 9.3 9.3 - 9.0 9.2 2.4
Source: Company, Angel Research
SEL believes that there are already signs of reducing competition in the road BOT
space, evident by the lower number of participants in the recent bidding of
projects. Moreover, as per management, the road BOT space will offer 70-80
projects in the next 15 months, implying some share of the pie for all players.
Further, with a decent order book in hand, the company is concentrating more on
improving the quality of earnings and maintaining its PAT margin. Our revisedSOTP-based target price works out to `157/share (`150/share), implying an11.2% upside from current levels, based on a target P/E multiple of 9x to itsFY2013E earnings and valuing its BOT arm on FCFE basis.Hence, we recommendAccumulate on the stock.
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Sadbhav Engineering | 3QFY2012 Result Update
February 6, 2012 7
Exhibit 9:SOTP break-up
Business Segment Methodology Remarks ` cr `/shareConstruction (a) P/E 9x FY2013E earnings 1,239 82.6SIPL - Road BOT Projects 1,437 95.9
Ahmedabad Ring (SIPL's share 80%) NPV CoE -14%, Traffic & Toll increase 5% each 247 16.5
Aurangabad - Jalna (SIPL's share 100%) NPV CoE -14%, Traffic 5% & Toll increase 18.5% (every 3 years) 172 11.5
Mumbai - Nasik (SIPL's share 20%) NPV CoE -14%, Traffic & Toll increase 5% each 110 7.3
Nagpur - Seoni (SIPL's share 51%) NPV CoE -14%, Annuity Project 37 2.5
Dhule - Palasner (SIPL's share 27%) NPV CoE -14%, Traffic & Toll increase 5% each 112 7.5
Maharasthra Border (SIPL's share 90%) NPV CoE -14%, Traffic & Toll increase 5% each 323 21.5
Rohtak - Panipat (SIPL's share 100%) NPV CoE -14%, Traffic & Toll increase 5% each 220 14.6
Bijapur - Hungund (SIPL's share 77%) NPV CoE -14%, Traffic & Toll increase 5% each 144 9.6
Hyderabad - Yadgiri (SIPL's share 60%) NPV CoE -14%, Traffic & Toll increase 5% each 72 4.8
SEL holds 77.8% stake in SIPL (b) PE investors have bought 22.2% stake for Rs400cr valuating SIPL at `1,800cr 1,118 74.6Total (a+b) 157.2Construction (a) P/E 9x FY2013E earnings 1,239 82.6
Source: Company, Angel Research
Exhibit 10:Key assumptions
FY2008 FY2009 FY2010 FY2011 FY2012E FY2013EOrder inflow 1,183 2,649 2,912 2,363 905 2,271
Revenue 899 1,074 1,257 2,209 2,602 2,585
Order backlog (Y/E) 2,764 4,339 5,994 6,965 5,267 4,954
Order bookto-sales ratio (x) 3.1 4.0 4.8 3.2 2.0 1.9
Source: Company, Angel Research
Exhibit 11:BOT assumptions
Project ARRIL AJIT MNEL NSEL DPTL MBCPNL RPTL BHTL HYTLType Toll Toll Toll Annuity Toll Entry Fees Toll Toll Toll
Status Oper. Oper. Oper. Under Dev. Under Dev. Under Dev. Under Dev. Under Dev. Under Dev.
KM 76 66 100 57 97 - 66 100 35
Issuing Auth. AUDA MSRDC NHAI NHAI NHAI MSRDC NHAI NHAI NHAI
State Gujarat Mah. Mah. MP Mah./MP Mah. Haryana Karnataka AP
Concession (Yrs) 20 24 20 20 18 25 25 20 23Con. Start Jan-07 Jan-07 Dec-09 May-07 Dec-09 Apr-12 Sep-10 Mar-13 Aug-10
Con. End Jan-27 Jul-30 Dec-29 Nov-27 Dec-27 Aug-34 Sep-35 Sep-30 Aug-33
TPC (`cr) 515.0 277.0 753.0 269.8 1,420.0 1,426.4 1,213.6 1,257.1 480.2
Equity (`cr) 74.0 83.0 52.0 31.5 355.0 285.4 242.8 137.0 100.0
Debt (`cr) 405.0 194.0 650.0 238.3 1,065.0 1,141.0 970.8 846.5 380.2
Grant (`cr) 36.0 - 51.0 - - - - 273.6 -
Traffic Growth (%) 5.0 5.0 5.0 - 5.0 5.0 5.0 5.0 5.0
Toll inc (%) 5.0 5.0 5.0 - 5.0 5.0 5.0 5.0 5.0
Interest Rate (%) 11.0 11.0 11.0 8.9 11.8 12.8 12.3 10.5 12.8
Source: Company, Angel Research
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Sadbhav Engineering | 3QFY2012 Result Update
February 6, 2012 8
Exhibit 12:Angel EPS forecast vs. consensus
Angel Forecast Bloomberg consensus Variation (%)FY2012E 9.3 9.6 (3.0)
FY2013E 9.2 10.2 (10.2)Source: Company, Angel Research
Investment arguments
Sound balance sheet: SEL has a sound balance sheet with parent net debt/equity0.6x as of 2HFY2012 only company in our universe to have reduced its debt in
FY2011. The companys working capital position (73 days 1HFY2012) is also
much better than its peers. This has insulated the companys earnings to a great
extent in such an exorbitant interest rate scenario, which has been the key concern
for the decline in the sectors earnings, and has aided the company to outperform
on the bourses.
Funds tied up for projects in hand: SEL had successfully raised `400cr throughstake dilution (22.2% in August 2010) in SIPL. This has made SEL fully tied up for
the projects in hand. This money raising was a timely development for SEL, given
its then huge equity commitment towards under development projects. Also, this
helped the company to focus on execution of projects, which is SELs forte, leading
to early completion of projects a rare phenomenon in the industry.
Key concernsInterest rate: Road BOT projects are vulnerable to interest rate fluctuations, andany hike in interest rates would increase SELs interest costs.
Commodity risks: Road players are facing pressures from the recent price inflationin commodities such as cement, steel, bitumen and diesel, which have a direct
impact on margins.
Awarding from NHAI: Slowdown in awarding activity by NHAI would hit orderinflow for road-focused players such as SEL.
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Sadbhav Engineering | 3QFY2012 Result Update
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Exhibit 13:Recommendation summary
Company CMP TP Rating Top line (` cr) EPS (`) Adj. P/E OB/FY11 FY12E FY13E CAGR (%) FY11 FY12E FY13E CAGR (%) FY11 FY12E FY13E Sales(x)
ABL 202 245 Buy 1,302 1,648 1,853 19.3 19.2 21.7 25.4 15.2 10.6 9.3 8.0 4.2CCCL 18 - Neutral 2,199 2,350 2,451 5.6 2.5 (1.1) 1.6 (20.5) 6.9 - 10.9 2.7
HCC 25 - Neutral 4,093 3,915 4,633 6.4 1.2 (3.1) 0.6 (25.8) 21.0 - 38.2 4.0
IRB Infra 178 182 Neutral 2,438 3,176 3,781 24.5 13.6 14.2 13.1 (2.0) 13.1 12.6 13.7 -
ITNL 215 227 Accu. 4,049 5,169 6,609 27.8 22.3 24.4 25.7 7.4 9.6 8.8 8.4 5.2
IVRCL 57 56 Neutral 5,651 5,598 6,458 6.9 5.9 3.8 4.6 (11.5) 9.6 15.1 12.3 4.5
JP Assoc. 78 88 Accu. 13,832 13,763 16,017 7.6 5.5 2.7 4.2 (12.6) 14.1 28.4 18.5 -
L&T 1,383 1,608 Buy 43,905 53,779 60,258 17.2 54.3 63.7 70.9 14.2 25.5 21.7 19.5 3.3
Madhucon 61 77 Buy 1,816 1,952 2,503 17.4 5.6 4.4 4.7 (8.1) 11.0 13.8 13.0 3.8
NCC 61 59 Neutral 5,074 5,095 5,749 6.4 6.4 3.6 3.8 (22.4) 9.6 17.3 16.0 3.4
Patel Engg 111 - Neutral 3,476 3,271 3,586 1.6 17.6 14.0 14.5 (9.2) 6.3 7.9 7.7 2.7
Punj Lloyd 57 - Neutral 7,850 9,585 10,592 16.2 (5.4) 1.9 2.9 - - 29.8 19.5 3.3
Sadbhav 141 157 Accu. 2,209 2,602 2,585 8.2 8.0 9.3 9.2 7.3 17.7 15.2 15.4 2.7Simplex In. 199 233 Buy 4,889 5,562 6,485 15.2 21.5 18.9 25.9 9.8 9.3 10.5 7.7 3.1
Source: Company, Angel Research
Exhibit 14:SOTP break-up
Company Core Const. Real Estate Road BOT Invst. In Subsidiaries Others Total` % to TP ` % to TP ` % to TP ` % to TP ` % to TP `
ABL 10442 - - 141 58 - - - - 245
CCCL 17 100 - - - - - - - - 17HCC 4 12 12 37 16 51 - - - - 32
IRB Infra 116 64 - - 61 34 4 2 - 182
ITNL 59 26 - - 143 63 - - 25 11 227
IVRCL 37 66 - - - - 19 34 - - 56
JP Assoc. 31 35 24 27 - - - - 33 37 88
L&T 1,276 79 - - - - 332 21 - - 1,608
Madhucon 23 30 2 3 52 68 - - - 77
NCC 31 52 2 3 8 14 - - 18 31 59
Patel Engg 55 51 17 16 16 15 - - 19 18 106
Punj Lloyd 47 100 - - - - - - - - 47
Sadbhav 83 53 - - 75 47 - - - - 157Simplex In. 233 100 - - - - - - - - 233
Source: Company, Angel Research
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Sadbhav Engineering | 3QFY2012 Result Update
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Profit & loss statement (Standalone)
Y/E March (` cr) FY2008 FY2009 FY2010 FY2011 FY2012E FY2013ENet Sales 899 1,074 1,257 2,209 2,602 2,585Other operating income - - - - - -Total operating income 899 1,074 1,257 2,209 2,602 2,585% chg 84.1 19.5 17.0 75.8 17.8 (0.7)
Total Expenditure 798 954 1,119 1,983 2,333 2,311
Net Raw Materials 234 276 211 160 174 164
Other Mfg costs 524 625 843 1,707 2,051 2,037
Personnel 39 51 66 116 108 111
Other 2 1 (1) 0 - -
EBITDA 100 120 138 226 270 274% chg 65.8 19.7 14.7 64.0 19.4 1.4
(% of Net Sales) 11.2 11.2 11.0 10.2 10.4 10.6
Depreciation& Amortisation 14 16 23 27 31 35
EBIT 86 104 114 199 238 239% chg 89.5 20.8 9.7 73.9 19.8 0.2
(% of Net Sales) 9.6 9.7 9.1 9.0 9.2 9.2
Interest & other Charges 16 21 33 43 54 48
Other Income 4 12 17 20 39 95
(% of PBT) 5.2 12.4 17.0 11.1 17.6 33.2
Share in profit of Associates - - - - - -
Recurring PBT 75 95 98 176 224 286% chg 79.4 27.0 3.5 79.4 27.3 27.7
Extraordinary Expense/(Inc.) - - - - - -
PBT (reported) 75 95 98 176 224 286Tax 23.6 19.2 44.1 56.2 72.6 92.7
(% of PBT) 31.7 20.3 45.0 32.0 32.4 32.4
PAT (reported) 51 75 54 120 151 193 Add: Share of earnings of asso - - - - - -
Less: Minority interest (MI) - - - - - -
Prior period items - - - - - -
PAT after MI (reported) 51 75 54 120 151 193ADJ. PAT 51 75 54 120 139 138% chg 72.5 48.0 (28.6) 122.1 16.2 (1.0)(% of Net Sales) 5.7 7.0 4.3 5.4 5.3 5.3
Reported EPS (`) 4.1 6.0 4.3 8.0 10.1 12.9Adj. EPS (`) 3.4 5.0 3.6 8.0 9.3 9.2% chg 72.5 48.0 (28.6) 122.1 16.2 (1.0)
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Balance sheet (Standalone)Y/E March (` cr) FY2008 FY2009 FY2010 FY2011 FY2012E FY2013ESOURCES OF FUNDSEquity Share Capital 13 13 13 15 15 15Preference Capital - - - - - -
Reserves& Surplus 274 331 379 611 751 934
Shareholders Funds 286 343 392 626 766 949Minority Interest - - - - - -Total Loans 150 211 424 396 515 445
Deferred Tax Liability 10 11 14 16 16 16
Total Liabilities 446 566 830 1,038 1,297 1,410APPLICATION OF FUNDSGross Block 241 261 332 372 412 456
Less: Acc. Depreciation 98 106 122 142 173 208
Net Block 143 155 210 230 238 248Capital Work-in-Progress - - - - - -
Goodwill - - - - - -
Investments 120 125 144 326 381 477Current Assets 434 592 1,009 1,434 1,720 1,731
Inventories 85 28 54 69 88 94
Debtors 154 278 441 687 874 885
Cash 10 10 45 85 62 156
Loans & Advances 168 276 467 586 690 589
Other 16 1 3 7 6 6
Current liabilities 253 306 534 952 1,043 1,046
Net Current Assets 181 286 476 482 678 686Misc. Exp. not written off 2 1 - - - -
Total Assets 446 566 830 1,038 1,297 1,410
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Cash flow statement (Standalone)Y/E March (` cr) FY2008 FY2009 FY2010 FY2011 FY2012E FY2013EProfit Before Tax 75 95 98 176 224 286
Depreciation 14 16 23 27 31 35Change in Working Capital 127 105 155 (34) 218 (86)
Less: Other income 6 - 17 20 39 95
Direct taxes paid 24 19 44 56 73 93
Cash Flow from Operations (68) (14) (95) 161 (75) 219(Inc.)/ Dec. in Fixed Assets (39) (19) (72) (39) (40) (44)
(Inc.)/ Dec. in Investments (74) (4) (20) (182) (55) (95)
Other income 6 - 17 20 39 95
Cash Flow from Investing (108) (23) (74) (202) (56) (44)Issue of Equity 90 - - 123 - -
Inc./(Dec.) in loans 77 61 213 (28) 119 (70)
Dividend Paid (Incl. Tax) 6 6 6 10 11 11
Others 0 (18) (3) (3) - -
Cash Flow from Financing 161 37 204 81 108 (80)Inc./(Dec.) in Cash (15) (0) 35 40 (22) 94
Opening Cash balances 25 10 10 45 85 62Closing Cash balances 10 10 45 85 62 156
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Key Ratios
Y/E March FY2008 FY2009 FY2010 FY2011 FY2012E FY2013EValuation Ratio (x)P/E (on FDEPS) 41.6 28.1 39.3 17.7 15.2 15.4
P/CEPS 32.7 23.3 27.5 14.5 12.4 12.3
P/BV 7.4 6.2 5.4 3.4 2.8 2.2
Dividend yield (%) 0.3 0.3 0.3 0.4 0.4 0.4
EV/Sales 2.5 2.2 2.0 1.1 1.0 0.9
EV/EBITDA 22.5 19.3 18.1 10.8 9.5 8.8
EV / Total Assets 5.1 4.1 3.0 2.3 2.0 1.7
Per Share Data (`)EPS (Basic) 4.1 6.0 4.3 8.0 10.1 12.9
EPS (fully diluted) 3.4 5.0 3.6 8.0 9.3 9.2
Cash EPS 4.3 6.1 5.1 9.8 11.4 11.5DPS 0.4 0.4 0.4 0.5 0.5 0.5
Book Value 19.1 22.9 26.1 41.8 51.1 63.3
DuPont AnalysisEBIT margin 9.6 9.7 9.1 9.0 9.2 9.2
Tax retention ratio 0.7 0.8 0.5 0.7 0.7 0.7
Asset turnover (x) 2.8 2.2 1.9 2.5 2.4 2.1
ROIC (Post-tax) 18.5 16.8 9.4 15.6 14.7 13.0
Cost of Debt (Post Tax) 9.6 9.4 5.7 7.1 8.0 6.8
Leverage (x) 0.4 0.5 0.8 0.7 0.5 0.4
Operating ROE 22.1 20.7 12.2 21.8 18.4 15.7
Returns (%)ROCE (Pre-tax) 25.6 20.6 16.4 21.3 20.4 17.6
Angel ROIC (Pre-tax) 27.0 21.0 17.1 22.9 21.8 19.2
ROE 23.5 23.9 14.7 23.5 20.0 16.0
Turnover ratios (x) Asset Turnover (Gross Block) 4.1 4.3 4.2 6.3 6.6 6.0
Inventory / Sales (days) 22 19 12 10 11 13
Receivables (days) 58 73 104 93 109 124
Payables (days) 104 89 128 125 136 145
W.cap cycle (ex-cash) (days) 43 76 103 68 71 81
Solvency ratios (x)Net debt to equity 0.5 0.6 1.0 0.5 0.6 0.3
Net debt to EBITDA 1.4 1.7 2.8 1.4 1.7 1.1
Interest Coverage 5.5 4.9 3.5 4.7 4.4 5.0
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Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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Disclosure of Interest Statement Sadbhav Engg
1. Analyst ownership of the stock No
2. Angel and its Group companies ownership of the stock No
3. Angel and its Group companies' Directors ownership of the stock No
4. Broking relationship with company covered No
Note: We have not considered any Exposure below `1 lakh for Angel, its Group companies and Directors.
Ratings (Returns): Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)Reduce (-5% to 15%) Sell (< -15%)