Motilal Oswal is bullish on Sadbhav Engineering has recommended buy rating on the stock with a target price of Rs 435 in its research report dated November 30, 2017.
Motilal Oswal's research report on Sadbhav 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.
We 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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