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Research
Sadbhav Engineering - 4QFY2012 Result Update - Angel Broking
Posted On : 2012-06-07 21:29:48( TIMEZONE : IST )
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 Rs.2,844cr (majority contribution by the two recent road BOT projects) during FY2012, taking its order book to Rs.7,554cr (2.8x FY2012 revenue), which provides good revenue visibility. We maintain our Buy view on the stock.
Mixed performance: On the top-line front, SEL reported a 13.6% yoy decline to Rs.905cr, marginally higher than our estimate of Rs.856cr. It should be noted that the decline was on account of high base in 4QFY2011. On a sequential basis, revenue grew by 24.8%. On the margin front, the company posted EBITDAM of 9.5%, tad lower than our estimate of 10.0% owing to development cost incurred in projects but revenue not booked. Interest cost stood at Rs.15cr, registering a decline of 10.4% yoy/5.6% qoq. On the earnings front, SEL reported a 13.0% yoy decline to Rs.47cr, lower than our expectation of Rs.53cr. We were expecting higher earnings on the back of bonus income as per the company's guidance.
Outlook and valuation: For FY2013, SEL has given a flat guidance on the revenue front primarily due to completion of Dhule Palesnar and Bijapur Hungund projects. Further, the two recently won road BOT projects - Gomti ka Chauraha and Solapur Bijapur - will start contributing to construction revenue post September 2013. On the EBITDAM front, the company expects its margin to stay at 10.5-11%. SEL's management has reiterated that the company would continue to focus on the sustainability of its margins. We continue to maintain our Buy view on the stock with an SOTP target price of Rs.182, owing to robust order backlog of Rs.7,554cr (2.8x FY2012 revenue), strong balance sheet (0.5x net debt/equity FY2012) and as the company's equity requirement for underconstruction/ development projects is expected to be met by internal accruals.
