Sadbhav Engineering (SEL’s) topline remained flattish at Rs 690.6 crore possibly on account of muted execution EBITDA margins expanded 70 bps YoY to 12.1% (better than our estimate: 11.8%) Net profit grew 14.4% YoY to Rs 38.3 crore (our estimate: Rs 40.6 crore) on account of high EBITDA margin and higher other income In Q2FY19, SEL issued and allotted 1900 unsecured, listed non convertible debentures having face value of Rs 10 lakh each aggregating to Rs 190 crore on a private placement basis.
OutlookHence, we maintain our BUY recommendation on the stock with an SOTP based target price of Rs 280/share. We now value SEL’s 69% stake in SIPL at Rs 140/share and EPC business at Rs 144/share (7.0x FY20E EV/EBITDA implying PE multiple of 8.3x FY20E EPS).
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