Sharekhan's research report on Sadbhav Engineering
SEL reported dismal Q3 standalone earnings, affected by extended monsoons and inability to receive lenders’ funds in HAM projects. Management has trimmed down its FY2020 and FY2021 revenue guidance on account of weak Q2 and Q3. However, advance stages of HAM projects are likely to put execution on track from Q1FY2021. Sale of nine projects to IndInfravit is expected to reduce net debt to Rs. 400 crore from Rs. 2,372 crore.
Outlook
We maintain our Buy rating on Sadbhav Engineering Limited (SEL) with a revised PT of Rs. 120, factoring a steep cut in standalone net earnings estimates and rolling forward our EPC valuation multiple to FY2022E.
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