Q1 earnings were affected by a delay in receipt of appointed dates of hybrid-annuity projects (HAM) projects dragging down standalone net profit by 38% y-o-y. The management retained a Rs. 3,600 revenue guidance for FY2020 and a healthy execution outlook for H2FY2020. Reverse merger of SIPL being explored for making SEL asset-light having everything under one roof, focusing purely on EPC and O&M contracts.
OutlookWe maintain our Buy rating on Sadbhav Engineering expecting a revival in execution, benefits accruing from asset sale and reverse merger and an improvement in project tendering activity from H2FY2020.
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