Buy Sadbhav Engineering; target of Rs 423: HDFC Securities
HDFC Securities is bullish on Sadbhav Engineering has recommended buy rating on the stock with a target price of Rs 423 in its research report dated November 16, 2018.
November 21, 2018 / 03:49 PM IST
HDFC Securities' research report on Sadbhav Engineering
SEL reported Rev/PAT miss of 8/15% as 58% of order book is yet to move into execution. EBITDA margins inched up 71bps YoY to 12.1% on account of increased contribution from higher margin captive HAM projects. SEL has won Rs 16.2bn Maharashtra State EPC in 2QFY19, current order book is Rs 137.4bn (Ex L1 of Rs 2bn in irrigation). With a bid pipeline that includes ~Rs 12bn in mining and 9 projects in irrigation (in MP, Karnataka and Punjab) apart from upcoming tenders of Rs ~530/350bn on NHAI EPC/HAM, SEL will look to add another Rs 35-40bn by FY19-end. Of the 5 new HAM won in 2HFY19, SEL has achieved FC for 4 HAM and in principle FC for last one.
FY19/20E revenue guidance has been reduced by Rs 1/3bn to Rs 40/50bn. Owing to higher EBIDTA margin we have upgrade FY19/20E EPS by 14.2/13.3%. We increase SOTP based TP from Rs 375/sh to Rs 423/sh.
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