Broker’s Call: Sadbhav Engg

| Updated on March 09, 2018 Published on April 11, 2017


Sadbhav Engg (Long)

CMP: ₹339

Target: ₹379

Founded in 1988 by Vishnubhai Patel, Sadbhav Engineering Ltd (SEL) today is considered among the few elite infrastructure companies in the country.

Sadbhav group has managed 11 per cent market share in Hybrid Annuity Projects (HAM) leading to around ₹4,800 crore order inflows in FY17E.

Post the recent wins, we expect BOT/HAM share to rise to 50 per cent of FY17E order book. Rising acceptance of HAM model and lower competitive intensity should help Sadbhav in managing order inflows of ₹22,400 crore over FY18E-FY20E. We expect major order inflows across BOT/EPC along with small orders in iining and

irrigation verticals and are confident of three-year revenue CAGR of 20 per cent till FY20E.

With reducing overhangs related to legacy irrigation and NHAI EPC Projects on margin and WC fronts, rising share of

HAM project execution should enable margin expansion and WC improvements. Given recent orders and potential uptick in execution, we upgrade FY18E Sales/EBITDA/PAT by 2 per cent/4 per cent/22 per cent.

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Published on April 11, 2017
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