PREVIOUS TGT HIT RATING BUYAT 265-268 UPSIDE 318 (19%)

SWASTIKA RESEARCH TEAM August 19, 2015

COMPANY PROFILE- SECTOR- INFRASTRUCTURE

Sadbhav Engineering Limited, established in 1988, is counted among the leading Infrastructure companies of

India. Over the years, Sadbhav has succeeded in powerfully anchoring itself in the Indian Infrastructure sector

and today enjoys a prestigious position in the Infrastructure development industry.

AREA OF BUSINESS Construction of roads, highways, irrigation and mining.

COMPANY KEY DATA (As on March 31, 2015)

M Cap PE* Industry PE

Div. Yield

ROE** EPS^ Deb/Equity Net Profit Net Sales BV# Face Value

Beta

(` In Cr.) (X) (X) (%) (%) (`) Ratio (` In Cr.) (` In Cr.) (`) (`) (%)

5,098.72 44.84 24.61 0.24 6.63 6.63 0.99 113.73 2,969.85 61.21 1.00 1.14

NOTE: - *PE-PRICE EARNINGS RATIO, **ROE-RETURN ON EARNINGS, ^EPS-EARNING PER SHARE, #BV-BOOK VALUE

PEER GROUP CMP

(18.08.15)

Market Cap.

PE (X) EPS BV P/BV

(X) DIVIDEND Net Sales

Net Profit

Total Assets

Company Name

( In `) (` In Cr.) Ratio (`) (`) Ratio (%) (` In Cr.) (` In Cr.) (` In Cr.)

Sadbhav Engg. 331.50 5,098.72 44.84 6.34 61.21 4.86 70 2,969.53 113.73 1,820.53

IRB Infra 250.30 8,215.14 59.33 3.94 53.61 4.36 20 1,955.71 138.33 3,555.24

ABB 1,304.00 26,804.29 115.40 10.91 132.70 9.53 185 7,733.27 228.51 3,183.05

331.50CMP

(18.08.15)325-330

BUY AT

(`)

(396)

20%

UP

SIDE

18

MonthsDURATION

GROWTH METER (Past 3 Years) %

Sales Growth 17.32

Profit Growth 17.49

ROE 15.48

STOCK

TREASURE Sadbhav

TECHNICAL VIEW-

On the technical chart, the stock is in consolidation phase

from last many trading sessions. And stock is trading near

50 days daily moving average, we are recommending to

‘buy’ the particular stock at current levels.

FUNDAMENTAL VIEW-

The company has reported a Net sales of ` 829.29 cr. for

Q1FY16 as compared to ` 685.51 cr. in the last quarter

and Net Profit of ` 39.48 cr. as compared to ` 26.99 cr.

for Q1FY15.

EBITDA for the Q1FY15 has been growing around 24.69%

and EPS stood at ` 2.30 in Q1FY16 as compared to ` 1.78

in Q1FY15.

Net Income for the financial year ended 31st Mar 2015

was ` 2969.85 cr. as compared to ` 2358.12 cr., up by

25% and Net profit for the year was ` 113.73 cr. as

against ` 106.16 cr. last year, registering a growth at

around 7% YoY basis.

Earnings per share for the year stood at ` 6.63 and the

Book value per share stood at ` 62.64.

NPM is 3.38% and Interest Coverage ratio is 1.85 for

FY15.

The company has declared an equity dividend of 70%,

amounting to ` 0.70 per share for the financial year

2014-2015, and a dividend yield of 0.24%.

The Order Book of the company stands at around ` 9,100

cr. at the end of this fiscal year. On the other side Sadbhav

Engg-led Joint Venture bags ` 454 cr. road project in

Punjab section of NH-64.

We are expecting Net Sales and PAT of the company to

grow at a CAGR of 25.63% and 10.23% over 2014 to

2017E respectively.

EARNINGS ALERT

PARTICULARS Q1FY16 Q1FY15 Growth Q-o-Q (%)

Net Sales (` In Cr.)

829.29 685.51 20.97

Net Profit (` In Cr.)

39.48 26.99 46.28

EPS (`)

2.30 1.78 29.21

EBITDA (` In Cr.)

91.1 73.06 24.69

ONE YEAR PERFORMANCE NIFTY VS STOCK (2014-15)

KEY DISCUSSIONS

The company has seen a decent growth in terms of actual volume and revenue consistently growing in all the Special Purpose Vehicles (SPVs). From April 1st 2015 all the SPVs as per the toll rate hike and more particularly Maharashtra Border check post has seen 25 percent increase in the revenue because of the toll rate hike every three years, it got increased.

The orders traffic has started growing for Build-Operate-Transfer (BOT) projects and the majority of company’s assets now got stabilized during the last couple of quarters and the deal has gone and revenue has increased.

Currently, out of the 9 operational projects 8 are now cash sufficient actually so 8 projects are servicing

its own requirements everything from its own revenue itself. Except the last project got operational is Rohtak Panipat because of the normal industry practice the project gets almost 1-1.50 year to stablilse so ones it gets stabilise that project will also come on the track.

The engineering firm has recorded a 15% hike in traffic in its Hyderabad-Yadgiri highway project, following the division of Andhra Pradesh into Telangana and Seemandhara. The Aurangabad-Jalna tollway recorded a 4.35% surge in traffic at ` 850 mn.

Out of the projects under construction, in the next fiscal, company expects the completion of two BOT projects viz. Shreenathji-Udaipur and Bhilwara-Rajsamand.

Company has received new orders in the road sector solely of almost of around ` 1,700 cr. till now. So of the ` 904 cr. received post March 31st and earlier before that company received around close to ` 800 cr. of the orders in the last quarter of the previous year.

Sadbhav

NIFTY

NIFTY

NIFTY

CIPLA

NET SALES & NET PROFIT GROWTH (` In Cr.):

EPS & BOOK VALUE GROWTH (In `):

FINANCIAL PERFORMANCE-

Sources: Company research

PARTICULARS FY13A FY14A* FY15A FY16E** FY17E

Net Sales (` In Cr.)

1811.00 2358.12 2969.85 3711.25 4675.92

Net Profit (` In Cr.) 74.07 106.16 113.73 125.43 142.20

EPS (`) 4.31 6.19 6.63 7.31 8.29

PE Ratio (x) 74.24 51.69 48.26 43.77 38.60

Book Value (`) 55.15 61.59 62.64 69.76 78.05

Price/Book Ratio (x) 5.80 5.19 5.10 4.58 4.09

ROE (%) 8.89 11.36 11.88 13.10 14.85

Note: - *A-Actual & **E-Estimated & (Figures on Standalone Basis for the period ended March.)

OUTLOOK & VALUATION-

At the market price of ` 320.00 the stock PE is ~43.77 for FY16x and ~38.60 for FY17x.

Earnings per share of the company for FY16E and FY17E are seen at ` 7.31 and ` 8.29 respectively.

We are expecting Net Sales and PAT of the company to grow at a CAGR of 25.63% and 10.23% over 2014

to 2017E respectively.

Hence, we recommend ‘BUY’ in this particular stock with a target price of ` 396.00 for Medium to Long

term Investment.

Source: nseindia.com, bseindia.com, Wikipedia.com, moneycontrol.com, business standard & ET.

SWASTIKA PMS TEAM August 19, 2015

SWASTIKA INVESTMART LTD. PMS DESK

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Research Team Designation Email ID Contact

Sandeep Choubey Technical Research Analyst sandeep.choubey@swastika.co.in 0731-6688024

Anisha Agrawal Fundamental Research Analyst anisha.agrawal@swastika.co.in 0731-6688096

Santosh Meena Senior Research Analyst santosh.meena@swastika.co.in 0731-6688005

Amit Khare Senior Research Analyst amit.khare@swastika.co.in 0731-6644134

Manish Bimal Technical Research Analyst Manish.bimal@swastika.co.in 0731-6688012

STOCK

TREASURE