HDFC Securities' research report on Sadbhav Engineering
4QFY19 Rev/EBITDA/APAT was 22/18/68% below estimate (~21% below guidance). FY19 was a miss both in terms of inflows (~61% below original guidance) and top line (13% below original guidance). Even though NHAI tendering was virtually non-existent over 9MFY19, SEL failed to add any major projects in the last leg of tendering witnessed in 4QFY19. The MSRDC and KSHIP HAM wins though have provided some respite.
Outlook
We maintain BUY on SEL with a reduced SOTP of Rs 353/sh (vs Rs 382 earlier). We value SEL’s EPC business at 15x FY21E EPS and assign a 20% hold co discount to SIPL stake’s market value. Owing to delay in Appointed Dates (AD) we have downgraded FY20/21E standalone EPS by 15.1/9.4%.
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