Accumulate Sadbhav Infrastructure Project; target of Rs 134: Yes Securities

Yes Securities' research report onSadbhav Infrastructure Project

Sadbhav Infrastructure ended FY17 with PAT losses of INR 3.5 bn, down from loss of INR 4.0 bn reported in FY16. However, adjusting for non-cash items (MMR provision, depreciation and non-cash financial itms), the cash profit stood at INR 1.2 bn; implying positive operating leverage as the road portfolio is getting in steady state phase.

We look beyond the accounting treatments, and believe that the company is entering into superior cash flow generation phase. Current valuations are not demanding with implied traffic growth across all the projects throughout the concession period of less than 5.0%. Upgrade to ACCUMULATE with revised TP of INR 134 (from INR 101 earlier).

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