Edelweiss' research report onSadbhav Engineering
With work on projects won in FY16 in full swing, SEL posted strong revenues in H2FY17. With work on 2 more projects expected to commence over the next month, management expects to sustain healthy execution pace and has guided for INR 38bn plus top line in FY18.
OutlookImproving top line, healthy BOT portfolio and best-in-class execution skills render SEL an attractive bet. We expect: (a) higher order intake in the EPC arm; and (b) better cash flow generation in the BOT subsidiary, to trigger re-rating. We maintain ‘BUY’ with SOTP-based target price of INR 388 (INR 161 from EPC business at 16x FY19E P/E and balance from DCF valuation of BOT projects).
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