Sadbhav Engineering a CCUMULATE CMP `143 Performance Highlights Target Price `161
4QFY2011 Result Update | Infrastructure April 23, 2011 Sadbhav Engineering A CCUMULATE CMP `143 Performance Highlights Target Price `161 Y/E March (` cr) 4QFY11 4QFY10 % chg (yoy) 3QFY11 % chg (qoq) Investment Period 12 Months Net sales 1,047 457.2 128.9 476.2 119.8 Stock Info Operating profit 90.8 54.4 67.1 52.9 71.8 Sector Infrastructure Net profit 53.9 18.0 199.3 26.4 104.4 Market Cap (` cr) 2,140 Source: Company, Angel Research Beta 0.5 For 4QFY2011, Sadbhav Engineering (SEL) posted numbers much higher than our and street expectations both on the top-line and bottom-line fronts. We are 52 Week High / Low 164/94 revising our estimates for FY2012 and FY2013, given the higher-than-expected Avg. Daily Volume 19,468 top-line performance and pressure on EBITDA margins. We believe SEL has Face Value (` ) 1 posted consistent growth over the last few quarters and is appropriately rewarded BSE Sensex 19,602 on the bourses with great outperformance over its peers. Hence, we are Nifty 5,885 recommending an Accumulate view on the stock, given the recent sharp run up in the stock price and lower growth expected going ahead. Reuters Code SADE.BO Bloomberg Code SADE@IN Outstanding quarterly performance: For 4QFY2011, SEL reported staggering 128.9% yoy top-line growth to `1,047cr (`457.2cr) vs. our estimate of `603.6cr. Ramp-up in execution of captive road BOT projects led to this stupendous growth Shareholding Pattern (%) in revenue. On the EBITDA margin front, SEL posted a decline of 320bp to 8.7% (11.9%) below our estimates of 11.5%, owing to high subcontracting, increased Promoters 47.6 contribution from the low-margin irrigation segment and change in cost MF / Banks / Indian Fls 26.7 escalation policy.
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