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2QFY2012 Result Update | Infrastructure

November 1, 2011

Sadbhav Engineering
Performance Highlights
Y/E March (` cr) Net sales Operating profit Net profit
Source: Company, Angel Research

BUY
CMP Target Price
% chg (yoy) 65.0 44.1 32.1 1QFY12 612.9 67.8 33.8 % chg (qoq) (29.8) (33.2) (46.3)

`131 `165
12 Months

2QFY12 430.4 45.3 18.1

2QFY11 260.9 31.4 13.7

Investment Period
Stock Info Sector Market Cap (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (` ) BSE Sensex Nifty Reuters Code Bloomberg Code

Infrastructure 1,968 0.5 154/94 35,760 1 17,481 5,258 SADE.BO SADE@IN

For 2QFY2012, Sadbhav Engineerings (SEL) numbers came in ahead of our and street expectations. Order inflow for the quarter was at dismal `101cr as expected, but order book remains healthy at `6,259cr (2.8x FY2011 revenues). We believe SEL has performed better than its peers on the bourses and would continue to do so owing to 1) consistent quarterly growth on the earnings front unlike its peers which are marred by various headwinds; 2) better management of its finances with one of lowest leveraged balance sheet (standalone) despite a healthy portfolio of BOT assets; and 3) robust order book which lends revenue visibility. Hence, we maintain our Buy rating on the stock and as our top pick. Strong quarterly performance: SEL reported strong 65.0% yoy growth on the top-line front to `430.4cr (`260.9cr) vs. our estimate of 48.0% growth. SEL has been able to maintain a sturdy execution pace for captive road BOT projects since the last few quarters, leading to robust revenue growth. On the margin front, the company posted EBITDAM of 10.5% (12.0%), below our estimate of 11.3% mainly due to commodity price pressures. Interest cost stood at `15.4cr (`9.0cr), registering a jump of 70.9% yoy/22.5% qoq on account of rising interest rates. On the earnings front, SEL reported 32.1% growth yoy to `18.1cr (`13.7cr), higher than our expectation of `16.9cr on account of higher top-line growth. Outlook and valuation: SELs management expects the current intense competition to subside in couple of quarters, however denting the order inflow target for the fiscal. We believe that given SELs strong execution capabilities, healthy balance sheet, increasing opportunities on road front and expected rationality in bidding process would ensure consistent order inflows for company in FY2013 and hence investors should not be wary of slowdown on order inflow front on quarterly basis. Our SOTP-based target price works out to `165/share, implying a 25.7% upside from current levels, based on a target P/E multiple of 9x to its FY2013E earnings and valuing its BOT arm on DCF basis. Thus, we maintain our Buy view on the stock and as one of our top picks in the sector. Key financials (Standalone)
Y/E March (` cr) Net sales % chg Adj. net profit % chg EBITDA (%) FDEPS (`) P/E (x) P/BV (x) RoE (%) RoCE (%) EV/Sales (x) EV/EBITDA (x)
Source: Company, Angel Research

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 47.6 26.9 23.1 2.5

Abs. (%) Sensex Sadbhav

3m (7.1)

1yr

3yr 69.1

(4.6) (14.1)

(9.3) 197.2

FY2010 1,257 17.0 53.8 (28.6) 11.0 3.6 36.5 5.0 14.7 16.4 1.9 17.1

FY2011 2,209 75.8 119.6 122.1 10.2 8.0 16.5 3.1 23.5 21.3 1.0 10.1

FY2012E 2,602 17.8 137.0 14.5 10.4 9.1 14.4 2.6 19.7 20.4 0.9 9.0

FY2013E 2,768 6.4 147.5 7.7 10.6 9.8 13.3 2.1 17.1 19.0 0.8 7.8

Shailesh Kanani
022-39357800 Ext: 6829 shailesh.kanani@angelbroking.com

Nitin Arora
022-39357800 Ext: 6842 nitin.arora@angelbroking.com

Please refer to important disclosures at the end of this report

Sadbhav Engineering | 2QFY2012 Result Update

Exhibit 1: 2QFY2012 performance


Y/E March (` cr) Net sales Total expenditure Operating profit OPM (%) Interest Depreciation Non operating income Non-recurring items Profit Before Tax Tax Reported Profit After Tax PAT (%) EPS (`)
Source: Company, Angel Research

2QFY12 430.4 385.1 45.3 10.5 15.4 7.0 5.2 28.1 10.0 18.1 4.2 1.2

2QFY11 260.9 229.5 31.4 12.0 9.0 6.7 5.1 20.8 7.1 13.7 5.3 0.9

% chg (yoy) 65.0 67.8 44.1 (150)bp 70.9 5.4 3.5 35.1 40.8 32.1 (110)bp 32.1

1QFY12 612.9 545.1 67.8 11.1 12.6 6.9 1.6 49.9 16.1 33.8 5.5 2.3

% chg (qoq) (29.8) (29.3) (33.2) (60)bp 22.5 1.0 226.9 (43.6) (38.0) (46.3) (130)bp (46.3)

1HFY12 1,043.3 930.2 113.1 10.8 28.0 13.9 6.8 78.0 26.0 51.9 5.0 3.5

1HFY11 686.2 604.2 82.1 12.0 20.5 13.1 10.7 59.1 19.9 39.2 5.7 2.6

% chg 52.0 54.0 37.8 (120)bp 36.4 6.3 (35.9) 32.0 31.0 32.5 (70)bp 32.5

Exhibit 2: Actual vs. Estimates


Estimates Revenue (` cr) EBITDA margin (%) PAT (` cr)
Source: Company, Angel Research

Actual 430.4 10.5 18.1

Variation (%) 11.5 (80)bp 7.5

386.1 11.3 16.9

Stellar performance on the revenue front continues


For 2QFY2012, SEL reported strong 65.0% yoy growth on the top-line front to `430.4cr (`260.9cr) vs. our estimate of 48.0% growth. SEL has been able to maintain a sturdy execution pace for captive road BOT projects since the last few quarters, leading to robust revenue growth. Revenue from the road segment contributed 86.8%, followed by the mining (9.3%) and irrigation (3.9%) segments to the total revenues. During the quarter, order inflow was dismal as SEL added only one road project worth `101cr, taking its total order inflow for 1HFY2012 at `340cr, hence we have lowered our order inflow estimates for the year. SELs current outstanding order book stands tall at `6,259cr (2.8x FY2011 revenue). Currently, the bid pipeline for SEL is six projects in the road segment worth ~`7,250cr, three projects in irrigation of ~`525cr and four in mining worth ~`1,250cr. Management is confident of good conversion from the same but we remain conservative given the current slowdown faced by the economy and expect sizeable action in FY2013 only.

Operational BOT Projects Toll collection


On the toll collection front, SEL reported 22% yoy growth for Ahmedabad Ring road project to `18.3cr (`15.0cr) and 16.2% yoy growth for Aurangabad Jalna project to `6.2cr (`5.3cr). As per management, these projects have witnessed traffic growth of 13-15% on a yoy basis.

November 1, 2011

Sadbhav Engineering | 2QFY2012 Result Update

Exhibit 3: Execution momentum to continue


1200 1000 800 600 400 200 0 51.7 22.9 10.5 14.5 19.9 11.4 14.7 42.1 40.8 51.2 44.1 65.0 128.9 140.0 120.0 100.0 80.0 60.0 40.0 20.0 -

Exhibit 4: Road segment Lions share of overall revenue (%)


100 90 80 70 60 50 40 30 20 10 FY2008 FY2009 Road BOT FY2010 FY2011 FY2012E Mining FY2013E 86 78 77 81 75 3 11 14 14 16 6 13 10 10 9 11 14

72

2QFY09

3QFY09

4QFY09

1QFY10

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

Sales (` cr, LHS)

Growth (yoy %, RHS)

Irrigation

Source: Company, Angel Research

Source: Company, Angel Research

Projects update
Nagpur Seoni project: This project would be restricted only to the completed 28km, as NHAI has not been able to acquire the balance land portion of 28km (total project length 56km). Hence, there would be no more equity infusion from SEL. As far as annuity payment is concerned, SEL received `28cr in FY2011 (operational for 10 months) and is expecting to receive ~`36cr (original annuity payment ~`70.8cr) as annuity payment in FY2012. Mumbai Nasik project: The company has started tolling on the balance 36km of the project, and currently toll revenue is around `31lakhs/day but for the full year, SEL is confident of achieving `34-35lakhs/day. Maharashtra border check post project: SEL has possession of 15 check posts, out of the total 22 check posts; and possession of additional four check posts is expected by December 2011. SEL expects to commission the first check post by January 2012, five by March 2012 and nine by June 2012. In terms of revenue, 12 check posts are expected to contribute `150cr-160cr to revenue (70% of the total revenue from this project). Chhindwara project (Cash contract): SEL started work on this project from November 1, 2011, with 90% of mobilization completed. SEL is expecting a 10% mobilization advance (interest free) and 5% equipment advance (interest 10%).

Exhibit 5: Status of under-construction projects as of 2QFY2012


Project Dhule Palasner MBCPNL Rohtak Panipat Bijapur Hungund Hyderabad Yadgiri Total Work comp. (` cr) 976.7 213.4 178.5 767.2 242.9 2,378.7 Work rem. (` cr) 192.4 620.6 771.5 257.8 1,998.1 17-Jun-12 Oct-13 3-Mar-13 *15-Dec-11 *1-Dec-12 *30-Nov-11 31-Mar-12 Sch. COD Expected COD Early completion (In months) 6 11 15 1 Execution (2QFY12) 85.5 46.7 73.5 112.6 51.7 369.9 Debt (1HFY12) 608.0 407.0 184.0 595.0 161.1 1,955.1 Int. Rate (%) 11.75 12.75 12.25 10.50 12.75

155.9 10-May-12

Source: Company, Angel Research, Note: * 75% completion expected by management which will lead to early COD

November 1, 2011

Sadbhav Engineering | 2QFY2012 Result Update

Lower EBITDAM and high interest cost lower earnings growth


During the quarter, SEL posted EBITDAM of 10.5% (12.0%), below our estimate of 11.3% mainly due to commodity price pressures (bitumen and diesel). Interest cost stood at `15.4cr (`9.0cr) a jump of 70.9% yoy/22.5% qoq on account of rising interest rates and booking interest income under other income as against earlier policy of netting off with interest cost. On the earnings front, SEL reported 32.1% yoy growth to `18.1cr (`13.7cr), higher than our expectation of `16.9cr on account of better-than-expected top-line growth and higher other income. Lower EBITDAM and high interest cost curbed the strong top-line growth of 65.0% yoy to flow to the bottom line, which grew by only 32.1% yoy.
Exhibit 6: High commodity prices drag EBITDAM lower
100.0 90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 10.1 11.4 11.1 9.0 9.1 11.9 11.9 12.0 11.1 8.7 14.0 11.1 10.5 12.0 10.0 8.0 6.0 4.0 2.0 -

Exhibit 7: Lower EBITDA and interest cost


60.0 50.0 40.0 30.0 20.0 10.0 0.0 2.6 4.8 7.3 6.0 4.5 3.9 6.0

lower PATM
8.0 7.0 6.0 4.2 5.0 4.0 3.0 2.0 1.0 -

9.3

5.3 5.5 5.2 5.5

2.0

2QFY09

3QFY09

4QFY09

1QFY10

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY09

3QFY09

4QFY09

1QFY10

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

EBITDA (` cr, LHS)

EBITDAM (%, RHS)

PAT (` cr, RHS)

PATM (%, RHS)

Source: Company, Angel Research

Source: Company, Angel Research

Bonus of `100cr to come over FY2012-13 for SEL Parent


As per management, SEL parent will receive `100cr bonus as its share for the early completion of the two projects (Bijapur Hungund and Dhule Palesnar) during FY2012 (`18cr) and FY2013 (`82cr). This bonus (75% of toll collection) is payable to the EPC contractors (SEL and other sub contractors) for early completion of the project and is applicable from 75% completion of project (toll collection starts post 75% completion) till the scheduled completion date. We have accounted this bonus amount (one time income) under other income for SEL Parent in FY2012 (`18cr) and FY2013 (`82cr). It should be noted that this bonus amount is adjusted from total earnings while assigning a PE multiple, for valuing its parent business, and calculating our SOTP target price.

November 1, 2011

2QFY12

Sadbhav Engineering | 2QFY2012 Result Update

Outlook and valuation


On the back of poor order inflow so far in 1HFY2012 and intense competition in the road segment, we have lowered our order inflow assumptions to `1,586cr (`2,489cr) and `2,371cr (`2,800cr) for FY2012 and FY2013, respectively. Thus, our revenue estimate for FY2013 has also been reduced by 3.4% to `2,768cr from `2,865cr earlier. On the EBITDAM front, SEL is confident of achieving EBITDAM of 11-11.25%, but conservatively we have factored in margin of 10.4% (9.8%) and 10.6% (10.4%) for FY2012 and FY2013, respectively. We have also factored in higher interest cost on the back of increased debt and high interest rate scenario. Thus, on account of the above-mentioned changes, our revised earnings estimates stand at `128.9cr (`129.9cr) and `147.5cr (`150.6cr) for FY2012 and FY2013, respectively.

Exhibit 8: Change in estimates


FY2012E Earlier Estimates Revenue (` cr) EBITDA margin (%) PAT (` cr)
Source: Company, Angel Research

FY2013E Variation (%) 60bp (0.8) Earlier Estimates 2,865 10.4 150.6 Revised Estimates 2,768 10.6 147.5 Variation (%) (3.4) 20bp (2.1) 2,602 10.4 128.9

Revised Estimates

2,602 9.8 129.9

SELs management expects the current intense competition to subside in couple of quarters, however denting the order inflow target for the fiscal. We believe that given SELs strong execution capabilities, healthy balance sheet, increasing opportunities on road front and expected rationality in bidding process would ensure consistent order inflows for company in FY2013 and hence investors should not be wary of slowdown on order inflow front on quarterly basis. At current levels, the stock is trading at valuations of 13.3x FY2013E earnings and 2.1x FY2013E P/BV on a standalone basis. Our SOTP-based target price works out to `165/share, implying a 25.7% upside from current levels, based on a target P/E multiple of 9x to its FY2013E earnings and valuing its BOT arm on DCF basis. Thus, we maintain our Buy view on the stock and as one of our top picks in the sector.

November 1, 2011

Sadbhav Engineering | 2QFY2012 Result Update

Exhibit 9: SOTP break-up


Business Segment
Construction (a) SIPL - Road BOT Projects Ahmedabad Ring (SIPL's share 80%) Aurangabad - Jalna (SIPL's share 100%) Mumbai - Nasik (SIPL's share 20%) Nagpur - Seoni (SIPL's share 51%) Dhule - Palasner (SIPL's share 27%) Maharasthra Border (SIPL's share 90%) Rohtak - Panipat (SIPL's share 100%) Bijapur - Hungund (SIPL's share 77%) Hyderabad - Yadgiri (SIPL's share 60%) Value of Incremental Projects - 10% SEL holds 77.8% stake in SIPL (b) Total (a+b) Source: Company, Angel Research PE investors have bought 22.2% stake for Rs400cr valuating SIPL at `1,800cr NPV NPV NPV NPV NPV NPV NPV NPV NPV CoE -14%, Traffic & Toll increase 5% each CoE -14%, Traffic 5% & Toll increase 18.5% (every 3 years) CoE -14%, Traffic & Toll increase 5% each CoE -14%, Annuity Project CoE -14%, Traffic & Toll increase 5% each CoE -14%, Traffic & Toll increase 5% each CoE -14%, Traffic & Toll increase 5% each CoE -14%, Traffic & Toll increase 5% each CoE -14%, Traffic & Toll increase 5% each

Methodology
P/E

Remarks
9x FY2013E earnings

` cr `/share
1,327 1,474 206 141 110 37 112 342 220 100 72 134.0 1,146 88.6 98.3 13.7 9.4 7.3 2.5 7.5 22.9 14.6 6.6 4.8 8.9 76.5 165.1

Exhibit 10: Key assumptions


FY2008 FY2009 FY2010 Order inflow Revenue Order backlog (Y/E) Order bookto-sales ratio (x)
Source: Company, Angel Research

FY2011 FY2012E FY2013E 2,363 2,209 6,965 3.2 1,586 2,602 5,948 2.3 2,371 2,768 5,551 2.0

1,183 899 2,764 3.1

2,649 1,074 4,339 4.0

2,912 1,257 5,994 4.8

Exhibit 11: BOT assumptions


Project Type Status KM Issuing Auth. State Concession (Yrs) Con. Start Con. End TPC (` cr) Equity (` cr) Debt (` cr) Grant (` cr) Traffic Growth (%) Toll inc (%) Interest Rate (%) ARRIL Toll Oper. 76 AUDA Gujarat 20 Jan-07 Jan-27 515.0 74.0 405.0 36.0 5.0 5.0 11.0 AJIT Toll Oper. 66 MSRDC Mah. 24 Jan-07 Jul-30 277.0 83.0 194.0 5.0 5.0 11.0 MNEL Toll 100 NHAI Mah. 20 Dec-09 Dec-29 753.0 52.0 650.0 51.0 5.0 5.0 11.0 NSEL Annuity 57 NHAI MP 20 May-07 Nov-27 269.8 31.5 238.3 8.9 DPTL Toll 97 NHAI Mah./MP 18 Dec-09 Dec-27 1,420.0 355.0 1,065.0 5.0 5.0 11.8 MBCPNL Entry Fees MSRDC Mah. 25 Apr-12 Aug-34 1,426.4 285.4 1,141.0 5.0 5.0 12.8 RPTL Toll 66 NHAI Haryana 25 Sep-10 Sep-35 1,213.6 242.8 970.8 5.0 5.0 12.3 BHTL Toll 100 NHAI Karnataka 20 Mar-13 Sep-30 1,257.1 137.0 846.5 273.6 5.0 5.0 10.5 HYTL Toll 35 NHAI AP 23 Aug-10 Aug-33 480.2 100.0 380.2 5.0 5.0 12.8

Oper. Under Dev. Under Dev. Under Dev. Under Dev. Under Dev. Under Dev.

Source: Company, Angel Research

November 1, 2011

Sadbhav Engineering | 2QFY2012 Result Update

Exhibit 12: Angel EPS forecast vs. consensus


Angel Forecast FY2012E FY2013E
Source: Company, Angel Research

Bloomberg consensus 9.5 10.6

Variation (%) (3.8) (7.3)

9.1 9.8

Investment arguments
Aggressive ramp-up of the road BOT portfolio, leveraging on EPC competence: SEL has slowly and steadily moved up in the value chain from being a cash contractor to becoming an asset owner. The company is leveraging its core competence in the EPC business to encash on the upcoming opportunities in the road BOT space. This not only serves to shore up its EPC order book but also ensures a consistent revenue stream for SEL in the long run. Strong order book renders top-line visibility: As of 2QFY2012, SEL had a robust order book of `6,259cr (2.8x FY2011 revenue), owing to healthy order booking witnessed in the road segment. SELs order book is spread across segments, including road (66.3%), irrigation (16.9%) and mining (11.8%), with an average execution period of 2430 months. Pertinently, the robust order book continues to provide top-line visibility for the company.

Key concerns
Interest rate: Road BOT projects are vulnerable to interest rate fluctuations, and any hike in interest rates would increase SELs interest costs. Commodity risks: Road players are facing pressures from the recent price inflation in commodities such as cement, steel, bitumen and diesel, which have a direct impact on margins. Awarding from NHAI: Slowdown in awarding activity by NHAI would hit order inflow for road-focused players such as SEL.

November 1, 2011

Sadbhav Engineering | 2QFY2012 Result Update

Exhibit 13: Recommendation summary


Company CCCL HCC IRB Infra IVRCL JP Assoc. Punj Lloyd NCC SEL Simplex In. Patel Engg. Madhucon L&T ITNL CMP 20 28 164 39 76 56 52 131 209 97 69 205 TP Rating FY11 17 Reduce - Neutral 193 60 85 82 165 299 106 259 Buy Buy Accu. Buy Buy Buy Buy Buy Buy 2,199 4,093 2,438 5,651 7,850 5,074 2,209 4,889 3,499 1,816 4,049 Top line (` cr) FY12E 2,362 4,152 3,024 5,798 FY13E CAGR (%) 2,646 4,633 3,980 6,994 9.7 6.4 27.8 11.2 13.1 18.3 14.8 11.9 12.4 1.2 17.6 19.4 26.5 2.5 1.2 13.6 5.9 5.5 (5.4) 6.4 8.0 21.5 18.4 5.6 54.3 22.3 EPS (`) FY11 FY12E FY13E CAGR (%) (0.4) (1.0) 12.5 4.2 3.7 2.5 5.5 9.1 20.4 17.1 5.8 64.2 23.9 2.4 0.6 14.0 6.1 5.3 4.0 6.7 9.8 29.9 16.7 6.8 74.0 25.3 (3.5) (25.8) 1.5 1.6 (1.8) 2.4 11.1 18.1 (4.7) 10.7 16.7 6.4 7.8 5.3 3.6 13.9 3.7 6.9 9.7 0.8 3.9 18.6 1.6 Adj. P/E 5.7 5.1 20.4 22.7 4.2 6.0 10.2 0.9 3.7 15.7 1.5 8.4 5.1 3.5 14.4 14.0 3.5 5.6 7.0 0.9 3.2 13.6 1.4 OB/ 2.7 4.0 4.2 3.0 3.2 2.8 2.9 2.7 3.5 3.2 5.5 FY11 FY12E FY13E Sales(x)

13,832 15,092 17,683 9,585 10,992 5,755 2,602 5,286 3,272 1,959 4,910 6,689 2,768 6,178 3,587 2,512 6,484

- Neutral

- Neutral

1,390 1,714

43,905 53,503 62,568

Source: Company, Angel Research

Exhibit 14: SOTP break-up


Company ` CCCL HCC IRB Infra IVRCL JP Assoc. Punj Lloyd NCC SEL Simplex In. Patel Engg Madhucon L&T ITNL 17 4 101 43 31 72 53 89 299 40 59 1,332 90 Core Const. % to TP 100 9 52 71 37 100 65 54 100 33 55 78 35 ` 23 30 2 47 2 Real Estate % to TP 54 35 2 38 2 ` 16 70 8 76 16 33 143 Road BOT % to TP 37 36 10 46 13 31 55 Invst. In Subsidiaries ` 4 17 382 % to TP 2 29 22 ` 18 24 18 19 12 25 Others % to TP 9 29 22 16 12 10 Total ` 17 44 193 60 85 72 82 165 299 122 106 1,714 259

Source: Company, Angel Research

November 1, 2011

Sadbhav Engineering | 2QFY2012 Result Update

Profit & loss statement (Standalone)


Y/E March (` cr) Net Sales Other operating income Total operating income % chg Total Expenditure Net Raw Materials Other Mfg costs Personnel Other EBITDA % chg (% of Net Sales) Depreciation& Amortisation EBIT % chg (% of Net Sales) Interest & other Charges Other Income (% of PBT) Share in profit of Associates Recurring PBT % chg Extraordinary Expense/(Inc.) PBT (reported) Tax (% of PBT) PAT (reported) Add: Share of earnings of asso Less: Minority interest (MI) Prior period items PAT after MI (reported) ADJ. PAT % chg (% of Net Sales) Reported EPS (`) Adj. EPS (`) % chg FY2008 FY2009 FY2010 FY2011 FY2012E FY2013E 899 899 84.1 798 233.9 524 39.5 1.5 100.2 65.8 11.2 13.9 86.4 89.5 9.6 15.7 3.9 5.2 74.5 79.4 74.5 23.6 31.7 50.9 50.9 50.9 72.5 5.7 4.1 3.4 72.5 1,074 1,074 19.5 954 276.4 625 51.3 1.2 120.0 19.7 11.2 15.7 104.3 20.8 9.7 21.4 11.7 12.4 94.6 27.0 94.6 19.2 20.3 75.4 75.4 75.4 48.0 7.0 6.0 5.0 48.0 1,257 1,257 17.0 1,119 210.7 843 66.3 (0.6) 137.7 14.7 11.0 23.3 114.4 9.7 9.1 33.1 16.6 17.0 98.0 3.5 98.0 44.1 45.0 53.8 53.8 53.8 (28.6) 4.3 4.3 3.6 (28.6) 2,209 2,209 75.8 1,983 160.3 1,707 116.2 0.2 225.8 64.0 10.2 26.9 198.9 73.9 9.0 42.7 19.5 11.1 175.7 79.4 175.7 56.2 32.0 119.6 119.6 119.6 122.1 5.4 8.0 8.0 122.1 2,602 2,602 17.8 2,333 173.7 2,051 108.4 269.7 19.4 10.4 31.4 238.2 19.8 9.2 56.9 39.5 17.9 220.8 25.6 220.8 71.6 32.4 149.1 149.1 137.0 14.5 5.3 10.0 9.1 14.5 2,768 2,768 6.4 2,475 175.5 2,181 118.5 292.9 8.6 10.6 34.8 258.1 8.3 9.3 52.8 95.0 31.6 300.3 36.0 300.3 97.4 32.4 202.9 202.9 147.5 7.7 5.3 13.5 9.8 7.7

November 1, 2011

Sadbhav Engineering | 2QFY2012 Result Update

Balance sheet (Standalone)


Y/E March (` cr) SOURCES OF FUNDS Equity Share Capital Preference Capital Reserves& Surplus Shareholders Funds Minority Interest Total Loans Deferred Tax Liability Total Liabilities APPLICATION OF FUNDS Gross Block Less: Acc. Depreciation Net Block Capital Work-in-Progress Goodwill Investments Current Assets Inventories Debtors Cash Loans & Advances Other Current liabilities Net Current Assets Misc. Exp. not written off Total Assets 241.4 98.4 143.0 120.5 434 85.0 154 10.3 168.5 16.1 253 181 1.7 446 260.6 106.1 154.5 124.6 592 27.6 278 10.0 275.7 0.5 306 286 0.8 566 332.2 122.1 210.1 144.1 1,009 54.0 441 44.8 466.8 2.8 534 476 830 371.5 141.8 229.8 326.4 1,434 69.2 687 84.6 586.1 7.3 952 482 1,038 411.5 173.2 238.3 381.4 1,718 88.0 874 60.2 690.5 5.8 1,043 676 1,295 455.5 207.9 247.6 476.8 1,805 101.2 948 117.8 631.2 6.2 1,111 694 1,418 12.5 273.6 286.1 150.3 9.7 446 12.5 331.0 343.5 211.1 11.0 566 12.5 379.0 391.5 424.2 14.1 830 15.0 610.8 625.7 396.1 16.1 1,038 15.0 749.4 764.4 514.9 16.1 1,295 15.0 941.7 956.7 445.4 16.1 1,418 FY2008 FY2009 FY2010 FY2011 FY2012E FY2013E

November 1, 2011

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Sadbhav Engineering | 2QFY2012 Result Update

Cash flow statement (Standalone)


Y/E March (` cr) Profit Before Tax Depreciation Change in Working Capital Less: Other income Direct taxes paid Cash Flow from Operations (Inc.)/ Dec. in Fixed Assets (Inc.)/ Dec. in Investments Other income Cash Flow from Investing Issue of Equity Inc./(Dec.) in loans Dividend Paid (Incl. Tax) Others Cash Flow from Financing Inc./(Dec.) in Cash Opening Cash balances Closing Cash balances FY2008 FY2009 75 14 127 6 24 (68) (39) (74) 6 (108) 90 77 6 161 (15) 25 10 95 16 105 19 (14) (19) (4) (23) 61 6 (18) 37 (0) 10 10 FY2010 98 23 155 17 44 (95) (72) (20) 17 (74) 213 6 (3) 204 35 10 45 FY2011 FY2012E FY2013E 176 27 (34) 20 56 161 (39) (182) 20 (202) 123 (28) 10 (3) 81 40 45 85 221 31 218 39 72 (77) (40) (55) 39 (56) 119 11 108 (24) 85 60 300 35 (39) 95 97 182 (44) (95) 95 (44) (70) 11 (80) 58 60 118

November 1, 2011

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Sadbhav Engineering | 2QFY2012 Result Update

Key Ratios
Y/E March Valuation Ratio (x) P/E (on FDEPS) P/CEPS P/BV Dividend yield (%) EV/Sales EV/EBITDA EV / Total Assets Per Share Data (`) EPS (Basic) EPS (fully diluted) Cash EPS DPS Book Value DuPont Analysis EBIT margin Tax retention ratio Asset turnover (x) ROIC (Post-tax) Cost of Debt (Post Tax) Leverage (x) Operating ROE Returns (%) ROCE (Pre-tax) Angel ROIC (Pre-tax) ROE Turnover ratios (x) Asset Turnover (Gross Block) Inventory / Sales (days) Receivables (days) Payables (days) W.cap cycle (ex-cash) (days) Solvency ratios (x) Net debt to equity Net debt to EBITDA Interest Coverage 0.5 1.4 5.5 0.6 1.7 4.9 1.0 2.8 3.5 0.5 1.4 4.7 0.6 1.7 4.2 0.3 1.1 4.9 4.1 22 58 104 43 4.3 19 73 89 76 4.2 12 104 128 103 6.3 10 93 125 68 6.6 11 109 136 71 6.4 12 120 140 79 25.6 27.0 23.5 20.6 21.0 23.9 16.4 17.1 14.7 21.3 22.9 23.5 20.4 21.8 19.7 19.0 20.4 17.1 9.6 0.7 2.8 18.5 9.6 0.4 22.1 9.7 0.8 2.2 16.8 9.4 0.5 20.7 9.1 0.5 1.9 9.4 5.7 0.8 12.2 9.0 0.7 2.5 15.6 7.1 0.7 21.8 9.2 0.7 2.4 14.7 8.4 0.5 18.1 9.3 0.7 2.2 13.8 7.4 0.5 16.7 4.1 3.4 4.3 0.4 19.1 6.0 5.0 6.1 0.4 22.9 4.3 3.6 5.1 0.4 26.1 8.0 8.0 9.8 0.5 41.8 10.0 9.1 11.2 0.5 51.0 13.5 9.8 12.2 0.5 63.8 38.6 30.4 6.9 0.3 2.3 21.0 4.7 26.1 21.6 5.7 0.3 2.0 18.1 3.8 36.5 25.5 5.0 0.3 1.9 17.1 2.8 16.5 13.4 3.1 0.4 1.0 10.1 2.2 14.4 11.7 2.6 0.4 0.9 9.0 1.9 13.3 10.8 2.1 0.4 0.8 7.8 1.6 FY2008 FY2009 FY2010 FY2011 FY2012E FY2013E

November 1, 2011

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Sadbhav Engineering | 2QFY2012 Result Update

Research Team Tel: 022 - 39357800

E-mail: research@angelbroking.com

Website: www.angelbroking.com

DISCLAIMER
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment. Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals. The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly. Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in the past. Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in connection with the use of this information. Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have investment positions in the stocks recommended in this report.

Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered

Sadbhav Engg No No No No

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors.

Ratings (Returns):

Buy (> 15%) Reduce (-5% to 15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

November 1, 2011

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