SADBHAV ENGINEERING LTD – Q2 FY18

Sadbhav Engineering Ltd reported strong yearly growth for the second quarter FY18 with PAT almost doubling itself and EBDITA rising 20% YOY. Revenue stood at Rs. 6931 Mn for current quarter against Rs. 6156 Mn moving 13% up YOY. EBDITA for Q2 FY18 was reported at Rs. 793 Mn compared to Rs. 661 Mn same period previous year. PAT jumped to Rs. 335 Mn in the current September quarter against Rs. 185 Mn corresponding period previous year growing 81% YOY. Other Income was reported at Rs. 5 Mn in Q2 FY17. Operating expenditure was at Rs. 6143 Mn in the current quarter against Rs. 5503 Mn same period previous year growing 12% YOY. EBDITA & Net Profit Margin were reported at 11.44% & 4.83% respectively in the current September quarter. EBDITA margin expanded 70 basis points whereas Net Profit Margin grew 182 basis points YOY. One basis point is 1/100^th of a percentage. Higher Net Profit Margin was attained on the back of lower finance, depreciation and controlled operating expenditure in the current second quarter FY18. Interest/finance costs fell 3% YOY from Rs. 221 Mn in Q2 FY17 to Rs. 215 Mn in the current quarter whereas depreciation was almost constant at Rs. 251 Mn in the current quarter.

Sadbhav Engineering has four main revenue segments, namely Transport sector which includes BOT & EPC, Irrigation sector, Mining sector & Power Generation. Though Irrigation, mining & power sectors reported dismal numbers, Transport sector grew 34% YOY. Transport sector is the core revenue driver for Sadbhav Engineering Ltd contributing 88% of its revenues and its constituents, BOT & EPC growing 2.2 times 24% respectively YOY. BOT & EPC revenues stood at Rs. 739 Mn & Rs. 5399 Mn against Rs. 333 Mn & 4244 Mn respectively in the current September quarter. Total transport sector revenues stood at Rs. 6138 Mn compared to Rs. 4576 Mn corresponding quarter previous year. We recommend BUY for the stock for medium & long term with target of Rs. 475.  

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