Buy Sadbhav Engineering; target of Rs 264: Emkay

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26 Aug, 2025 12:21

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Revenue came at Rs5.94 bn +58% YoY versus expectation of Rs4.7 bn driven by better than expected execution run rate in the mining segment/BOT projects

EBITDA Came in at Rs596 mn +53% YoY versus expectation of Rs498 mn led by higher revenue flow however more than expected increase in employee cost & Material cost capped EBITDA Margin at 10% +17 bps versus expectation of 10.6%

PBT more than doubled YoY to Rs170m – as interest costs was stable YoY. Reported PAT declined 64% as 2QFY14 PAT was boosted by tax reversal due to benefits from section 80IA

Well placed to fund equity requirement of Rs3bn for BOT projects over FY14-16E, Given 60% of the equity investment is operational enhances visibility of raising further growth capital at the SIPL level, target price reduced on Equity dilution Maintain Buy

"The company reported revenue growth of Rs5.94 bn grew by 58% YoY versus expectation of Rs4.7 bn driven better execution run rate followed in the mining segment/BOT projects. The EBITDA Came in higher than expected at Rs596 mn grew by 53% due to higher revenue flow however higher employee cost (surged higher by 84% YoY) capped the operational profitability and EBITDA Margins came in at 10%. The higher employee cost largely pertains to increase in wages and bonus to labors working under the mining segment. The company’s joint venture partners like GKC faced issues of debt restructuring due to which Sadbhav took over irrigation projects due to which material cost edged higher (to receive Rs350 mn for executing these jobs) The company reported PBT of Rs170 mn +107% YoY and Reported PAT declined 64% as 2QFY14 PAT was boosted by tax reversal due to benefits from section 80IA. Tax rate edged higher at 40% versus expectation of 10%. Maintain buy with a target price of Rs 264", says Emkay Global Financial Services research.

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