Buy Sadbhav Engg; target of Rs 264: Emkay

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26 Aug, 2025 12:21

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Emkay Global Financial Services research report on Sadbhav Engineering“Sadbhav Engineering, reported revenue growth of Rs5.94 bn grew by 58% YoY versus expectation of Rs4.7 bn driven better execution run rate followed in the mining segment/BOT projects. The EBITDA Came in higher than expected at Rs596 mn grew by 53% due to higher revenue flow however higher employee cost (surged higher by 84% YoY) capped the operational profitability and EBITDA Margins came in at 10%. The higher employee cost largely pertains to increase in wages and bonus to labors working under the mining segment. The company’s joint venture partners like GKC faced issues of debt restructuring due to which Sadbhav took over irrigation projects due to which material cost edged higher (to receive Rs350 mn for executing these jobs) The company reported PBT of Rs170 mn +107% YoY and Reported PAT declined 64% as 2QFY14 PAT was boosted by tax reversal due to benefits from section 80IA. Tax rate edged higher at 40% versus expectation of 10%.” “Currently, SEL’s order-book stands strong at Rs83.4bn, leading to an order-book-to-sales ratio of 3.5x FY14 trailing revenues. The road sector has always been the key growth driver for the company, contributing 65-75% to its order-book. Over the past few quarters, it has been able to secure projects from irrigation and mining sectors, which have mitigated the concentration risk and improved revenue visibility. Revenue growth driven by in house BOT projects came at Rs3 bn +174% YoY, followed by mining segment which grew by 59% YoY. The execution left from Chindawara EPC projects amounts to Rs2bn to be executed in FY15E. Well placed to fund equity requirement of Rs3bn for BOT projects over FY14-16E, Given 60% of the equity investment is operational enhances visibility of raising further growth capital at the SIPL level, target price reduced on Equity dilution Maintain Buy,” says Emkay Global Financial Services research report.  

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