Motilal Oswal's research report onSadbhav Engineering
ADE sees robust business opportunity coming up in the road sector post the Bharatmala project announcement – the company expects annual awarding from the NHAI to be ~ INR800b in FY18 versus INR600b in the previous year. The company has maintained its standalone revenue guidance of INR38b /INR 45b for FY18/FY19, and expects the operating margin to be in the range of 11 -12%. Order inflow is expected to be ~INR70b for FY18. Management has reiterated its commitment to reduce debt incrementally by ~INR2b to INR12.5b by end -FY18.
OutlookWe maintain our Buy rating with an SOTP -based TP of INR435, valuing its EPC business at INR265 (16x its Dec’ 19E EPS of INR16.4) and its SIPL stake at INR170 (15% discount to CMP ).
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