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Emkay Global
Sadbhav Engineering (Buy)
CMP: ₹250
Target: ₹264
The company's second quarter revenue came in at ₹594 crore, a 58 per cent growth YoY versus expectation of ₹470 crore, driven by better-than-expected execution run rate in the mining segment/BOT projects. EBITDA came in at ₹59.60 crore, growth of 53 per cent YoY versus expectation of ₹49.8 crore, led by higher revenue flow.
However, more-than-expected increase in employee and material cost capped EBITDA margin at 10 per cent, a growth of 17 bps versus expectation of 10.6 per cent. Reported PAT declined 64 per cent as previous year comparable quarter profit was boosted by tax reversal due to benefits from Section 80IA.
Sadbhav Engineering is well placed to fund equity requirement of ₹300 crore for BOT projects over FY14-16E. Target price has been reduced to ₹264 on equity dilution.
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