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Sadbhav Engineering 1QFY2015 performance highlights and results update

August 14, 2014, Thursday, 20:48 GMT | 15:48 EST | 01:18 IST | 03:48 SGT
Contributed by Angel Broking

For 1QFY2015, Sadbhav Engineering (SEL) reported a stable set of numbers. The operating performance improved on back of improvement in efficiency with bottom-line further improving with better financial management. SEL has an order book of Rs.8,336cr (3.4x trailing revenues) as of 1QFY2015, which provides good revenue visibility.

Operational efficiency boosts bottom-line: On the top-line front, SEL reported a revenue growth of 21.6% yoy to Rs.685cr in 1QFY2015. The revenue growth was mainly on the back of pick up in execution in remaining under construction projects. On the margin front, the company posted an EBITDAM of 10.4%, up by 10bp yoy. The interest cost de-grew by 10.6% yoy to Rs.22cr. On the bottom-line front, the company’s PAT reported a growth of 67.3% yoy to Rs.27cr in 1QFY2015 mainly due to lower taxation.

Outlook and valuation: The Management expects strong execution to continue since it has already obtained the necessary clearances and has a robust order book. Given the healthy order book (3.4x trailing revenue), we expect the company to report revenues of Rs.2,827cr and Rs.3,534cr for FY2015 and FY2016 respectively. We maintain our Accumulate view on the stock with a SOTP based target price of Rs.233, owing to recent run-up in the stock price. The company has a robust order backlog of Rs.8,336cr (3.4x trailing revenues) and a strong balance sheet. It is expected that the company would be able to meet the equity requirement for its under-construction/development projects through internal accruals or securitization.

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