Sadbhav Engineering Result Updated

8/3/2019 Sadbhav Engineering Result Updated

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Please refer to important disclosures at the end of this report 1

Y/E March (` cr) 3QFY12 3QFY11 % chg (yoy) 2QFY12 % chg (qoq)Net sales 723.7 476.2 52.0 430.4 68.1Operating profit 75.2 52.9 42.3 45.3 66.1

Net profit 41.7 26.4 58.1 18.1 129.9Source: Company, Angel Research

For 3QFY2012, Sadbhav Engineering (SEL) reported another set of strong

numbers, marginally ahead of our expectations (highest on street) and way ahead

of street estimates. Order inflow for 9MFY2012 stood at `742cr, order book

remained decent at `5,940cr (2.7x FY2011 revenue). We are revising our toll

collection estimates for Ahmedabad Ring Road and Aurangabad Jalna projects.Also, we are factoring in lower interest cost for FY2013E as per managements

guidance. We remain positive on the stock, however owing to the recent run-up inthe share price, we recommend Accumulate on the stock. Strong quarterly performance: SEL reported robust top-line growth of 52.0% yoyto `723.7cr, in-line with our estimate of `714.3cr (consensus estimate of `630cr).

SEL has been able to maintain a sturdy execution pace for captive road BOT

projects since the past few quarters, leading to robust revenue growth. On the

margin front, the company posted EBITDAM of 10.4% (11.1%), marginally lower

than our estimate of 10.7%. The only surprise came on the interest cost front, as it

stood at `10.6cr (`9.7cr), registering a decline of 31.3% on a sequential basis

and lower than our estimate of `16.8cr. On the earnings front, SEL reported58.1% growth yoy to `41.7cr, above our expectation of `38.9cr (consensus

~`31.0cr) due to higher top-line growth and lower interest cost.Outlook and valuation: SEL believes that there are already signs of reducingcompetition in the road BOT space, evident by the lower number of participants in

the recent bidding of projects. Moreover, as per management, road BOT space

will offer 70-80 projects in the next 15 months, implying some share of the pie for

all players. Further, with a decent order book in hand, the company is

concentrating more on improving the quality of earnings and maintain its PAT

margins. Our revised SOTP-based target price works out to `157/share(`150/share), implying an 11.2% upside from current levels,based on a targetP/E multiple of 9x to its FY2013E earnings and valuing its BOT arm on FCFEbasis.Hence, we recommend Accumulate on the stock.Key financials (Standalone)Y/E March (` cr) FY2010 FY2011 FY2012E FY2013ENet sales 1,257 2,209 2,602 2,585% chg 17.0 75.8 17.8 (0.7)

Adj. net profit 54 120 139 138% chg (28.6) 122.1 16.2 (1.0)

EBITDA (%) 11.0 10.2 10.4 10.6

FDEPS (`) 3.6 8.0 9.3 9.2P/E (x) 39.3 17.7 15.2 15.4

P/BV (x) 5.4 3.4 2.8 2.2

RoE (%) 14.7 23.5 20.0 16.0

RoCE (%) 16.4 21.3 20.4 17.6

EV/Sales (x) 2.0 1.1 1.0 0.9

EV/EBITDA (x) 18.1 10.8 9.5 8.8

Source: Company, Angel Research

ACCUMULATECMP `141

Target Price `157

Investment Period 12 Months

Stock Info

Sector

Bloomberg Code

Shareholding Pattern (%)

Promoters 47.5

MF / Banks / Indian Fls 29.4

FII / NRIs / OCBs 20.5

Indian Public / Others 2.6

Abs. (%) 3m 1yr 3yr

Sensex 0.8 (1.7) 90.4

Sadbhav 5.2 39.9 332.9

1

17,7075,362

SADE.BO

SADE@IN

2,125

0.6

154/94

44,864

Infrastructure

Avg. Daily Volume

Market Cap (` cr)

Beta

52 Week High / Low

Face Value (` )

BSE SensexNifty

Reuters Code

Shailesh Kanani022-39357800 Ext: 6829

[email protected]

Nitin Arora022-39357800 Ext: 6842

[email protected]

Sadbhav EngineeringPerformance Highlights

3QFY2012 Result Update | Infrastructure

February 6, 2012


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Sadbhav Engineering | 3QFY2012 Result Update

February 6, 2012 2

Exhibit 1:3QFY2012 performance

Y/E March (` cr) 3QFY12 3QFY11 % chg (yoy) 2QFY12 % chg (qoq) 9MFY12 9MFY11 % chgNet sales 723.7 476.2 52.0 430.4 68.1 1,767.0 1,162.5 52.0Total expenditure 648.5 423.3 53.2 385.1 68.4 1,578.7 1,027.5 53.6Operating profit 75.2 52.9 42.3 45.3 66.1 188.3 134.9 39.5OPM (%) 10.4 11.1 (70)bp 10.5 (10)bp 10.7 11.6 (90)bp

Interest 10.6 9.7 9.1 15.4 (31.3) 38.6 17.1 126.0

Depreciation 6.9 6.8 0.1 7.0 (2.2) 20.8 20.0 4.2

Non operating income 4.6 4.3 6.6 5.2 (12.9) 11.4 1.8 518.1

Non-recurring items - - - - - - - -

Profit Before Tax 62.4 40.6 53.6 28.1 121.8 140.4 99.8 40.7Tax 20.6 14.2 45.1 10.0 107.0 46.7 34.1 36.9

Reported Profit After Tax 41.7 26.4 58.1 18.1 129.9 93.7 65.7 42.6PAT (%) 5.8 5.5 30bp 4.2 160bp 5.3 5.6 (30)bp

EPS (`) 2.8 1.8 58.1 1.2 129.9 6.2 4.4 42.6Source: Company, Angel Research

Exhibit 2:Actual vs. Estimates

Particulars (` cr) Estimates Actual Variation (%)Revenues 714.3 723.7 1.3

EBITDA 76.4 75.2 (1.6)

Interest 16.8 10.6 (37.0)

Tax 18.7 20.6 10.6

PAT 38.9 41.7 7.4Source: Company, Angel Research

Stellar performance on the revenue front continues

SEL reported robust 52.0% yoy growth on the top-line front to `723.7cr, in-line

with our estimate of `714.3cr (consensus estimate of `630cr). SEL has been able

to maintain a sturdy execution pace for captive road BOT projects since the past

few quarters, leading to robust revenue growth. Revenue from the road segment

contributed 90.2% to the total revenue, followed by the mining (8.3%) and

irrigation (1.5%) segments. During the quarter, SEL added only one mining project

worth `325cr, taking its total order inflow for 9MFY2012 to `742cr. SELs current

outstanding order book stands at `5,940cr (2.7x FY2011 revenue).

Currently, the bid pipeline for SEL is eight projects in the road segment worth

~`9,000cr, four projects in irrigation worth ~`1,250cr and six in mining worth

~`2,800cr. 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 19.1% yoy growth for Ahmedabad Ring

road project to `20.9cr (`17.5cr) and 14.4% yoy growth for Aurangabad Jalna

project to `7.3cr (`6.3cr). As per management, these projects have witnessedtraffic growth of 6.9% and 13.1% for Ahmedabad Ring road and Aurangabad

Jalna project, respectively, on a yoy basis.


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February 6, 2012 3

Exhibit 3:Strong revenue performance as expected


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


Projects update

Dhule Palesnar project: SEL has already completed 75% of the projects (100%expected by March 2012) and achieved provisional COD and is expecting to start

collecting toll in the next few days. Further, management is expecting an average

toll collection of `35-36 lakhs/day for the project.

Nagpur Seoni project: As per management, SEL has not received annuity paymentin FY2012 for the project. Out of the total project length of 56km, COD has been

declared for 36km and for the balance 20km land acquisition is remaining.

Further, SEL does not wish to relinquish the project and has proposed to NHAI to

give the balance project to SEL once land is acquired (even 1-1.5 years down

the line).

Maharashtra border check post project: SEL has possession of 12 check posts, outof the total 22 check posts; and possession of additional four check posts is

expected by June 2012. SEL expects to commission the first check post in February

2012 and three more by March 2012.

Chhindwara project (Cash contract): Environmental clearance for the project hasbeen received. SEL has started work on this project, however the company is

expecting revenue of only`70cr-80cr in 4QFY2012, and the project will attain full

swing in 1QFY2013 (revenue of ~`200cr expected). This project has got ~20%price escalation and, hence, the revised TPC stands at ~`1,700cr (previously

`1,411cr).

Savings on BOT projects

As per management, under-construction captive road BOT projects will witness cost

savings (Bijapur Hungund `115cr, MBCP `150cr-170cr, Dhule Palasner `30cr-40cr

and Rohtak Panipat `100cr-120cr), owing to early completion of projects (lower

interest during construction, contingency reserve and debt service reserve account).

These savings would definitely be positive for the company. However, we are notfactoring in these savings currently and would wait for actual numbers before

incorporating the same in our model.

51.7

22.9

10.514.519.9

11.4 14.7

42.1 40.851.2

128.9

44.1

65.0

52.0

-

20.0

40.0

60.0

80.0

100.0

120.0

140.0

0

200

400

600

800

1000

1200

2QFY09

3QFY09

4QFY09

1QFY10

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

3QFY12

Sales (` cr, LHS) Growth (yoy %, RHS)

8672 78 77

81 75

11

14 6 10 9 14

314 16 13

10 11

-

10

20

30

40

50

60

70

80

90

100

FY2008 FY2009 FY2010 FY2011 FY2012E FY2013E

Road BOT Irrigation Mining


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February 6, 2012 4

Exhibit 5:Status of under-construction projects as of 3QFY2012

Project Work comp. Work rem. Sch. COD Expected COD Early completion Execution Debt Int. Rate(`cr) (` cr) (In months) (3QFY12) (9MFY12) (%)

Dhule Palasner 1,107.2 113.8 17-Jun-12 *15-Dec-11 6 130.6 695.0 11.75MBCPNL 368.0 466.0 - - - 154.6 407.0 12.75

Rohtak Panipat 327.7 625.3 Oct-13 *1-Dec-12 11 149.2 271.0 12.25

Bijapur Hungund 947.6 77.4 3-Mar-13 *15-Feb-12 13 180.3 695.0 10.50

Hyderabad Yadgiri 266.4 132.4 10-May-12 31-Mar-12 1 23.5 228.0 12.75

Total 3,017.0 1,414.8 638.3 2,296.0Source: Company, Angel Research, Note: * 75% completion expected by management, which will lead to early COD

Stable EBITDAM and int. cost lead to robust earnings growth

On the margin front, the company posted EBITDAM of 10.4% (11.1%), marginally

lower than our estimate of 10.7%. The only surprise came on the interest costfront, as it stood at `10.6cr (`9.7cr), registering a decline of 31.3% on a sequential

basis and lower than our estimate of `16.8cr. The companys interest cost has

declined due to 1) reduction in interest rate by 100-150bp for interest charged by

working capital lenders on account of improvement in credit rating and 2) bank

guarantee charges decreasing due to change in policy by the company of paying

for petroleum products by advance cash instead of credit. Further, management

expects the debt level and interest cost to reduce going ahead and, hence, we are

factoring in interest cost of `48cr (previous estimate `53cr) for FY2013.

On the earnings front, SEL reported 58.1% growth yoy to `41.7cr, higher than our

expectation of `38.9cr (consensus estimate of ~`31.0cr) on account of highertop-line growth and lower-than-expected interest cost.

Exhibit 6:EBITDAM lower than estimate


Exhibit 7:Stable EBITDAM and interest cost -> PAT growth


9.310.1

9.0

11.411.1

9.1

11.911.912.011.1

8.7

11.110.510.4

-

2.0

4.0

6.0

8.0

10.0

12.0

14.0

-

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

2QFY09

3QFY09

4QFY09

1QFY10

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

3QFY12

EBITDA (` cr, LHS) EBITDAM (%, RHS)

2.6

4.8

7.3

6.0

2.0

4.53.9

6.05.3 5.5 5.2

5.5

4.2

5.8

-

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

0.0

10.0

20.0

30.0

40.0

50.0

60.0

2QFY09

3QFY09

4QFY09

1QFY10

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

3QFY12

PAT (` cr, RHS) PATM (%, RHS)


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February 6, 2012 5

Bonus of`100cr to come over FY2012-13 for SELs parent

As per management, SELs 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 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 SELs 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.

Equity requirement for BOT projects

SELs subsidiary, SIPL has a total equity requirement of ~`840cr for its nine BOT

projects in its portfolio, of which the company has already invested `660cr. For the

balance `180cr, SIPL can utilize unsecured loan (~`105cr) given to various

subsidiaries, expected generation of `40cr-45cr cash from Maharashtra Border

Check Post project and sanctioned loan from ICICI Bank of `180cr. Hence, SIPL

sits on a very comfortable position for the balance equity funding requirement for

its BOT projects.


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February 6, 2012 6

Outlook and valuation

We are revising our toll collection estimates upwards for Ahmedabad Ring

Road and Aurangabad Jalna projects on account of continued robust

performance on the projects. Also, we are factoring in lower interest cost for

FY2013E as per managements guidance and our revised interest cost stands

at `48cr from `53cr previously owing to this, our PAT estimate now stands at

`138cr from `134cr for FY2013E.

Exhibit 8:Change in estimates

FY2012 FY2013(` cr) Earlier Estimates Revised Estimates Variation (%) Earlier Estimates Revised Estimates Variation (%)Revenue 2,602 2,602 - 2,585 2,585 -

EBITDA 270 270 - 273 274 -

EBITDAM (%) 10.4 10.4 - 10.6 10.6 -

Interest 54 54 - 53 48 (9.1)

APAT 139 139- 134 138 2.4

EPS (`) 9.3 9.3 - 9.0 9.2 2.4


SEL believes that there are already signs of reducing competition in the road BOT

space, evident by the lower number of participants in the recent bidding of

projects. Moreover, as per management, the road BOT space will offer 70-80

projects in the next 15 months, implying some share of the pie for all players.

Further, with a decent order book in hand, the company is concentrating more on

improving the quality of earnings and maintaining its PAT margin. Our revisedSOTP-based target price works out to `157/share (`150/share), implying an11.2% upside from current levels, based on a target P/E multiple of 9x to itsFY2013E earnings and valuing its BOT arm on FCFE basis.Hence, we recommendAccumulate on the stock.


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February 6, 2012 7

Exhibit 9:SOTP break-up

Business Segment Methodology Remarks ` cr `/shareConstruction (a) P/E 9x FY2013E earnings 1,239 82.6SIPL - Road BOT Projects 1,437 95.9

Ahmedabad Ring (SIPL's share 80%) NPV CoE -14%, Traffic & Toll increase 5% each 247 16.5

Aurangabad - Jalna (SIPL's share 100%) NPV CoE -14%, Traffic 5% & Toll increase 18.5% (every 3 years) 172 11.5

Mumbai - Nasik (SIPL's share 20%) NPV CoE -14%, Traffic & Toll increase 5% each 110 7.3

Nagpur - Seoni (SIPL's share 51%) NPV CoE -14%, Annuity Project 37 2.5

Dhule - Palasner (SIPL's share 27%) NPV CoE -14%, Traffic & Toll increase 5% each 112 7.5

Maharasthra Border (SIPL's share 90%) NPV CoE -14%, Traffic & Toll increase 5% each 323 21.5

Rohtak - Panipat (SIPL's share 100%) NPV CoE -14%, Traffic & Toll increase 5% each 220 14.6

Bijapur - Hungund (SIPL's share 77%) NPV CoE -14%, Traffic & Toll increase 5% each 144 9.6

Hyderabad - Yadgiri (SIPL's share 60%) NPV CoE -14%, Traffic & Toll increase 5% each 72 4.8

SEL holds 77.8% stake in SIPL (b) PE investors have bought 22.2% stake for Rs400cr valuating SIPL at `1,800cr 1,118 74.6Total (a+b) 157.2Construction (a) P/E 9x FY2013E earnings 1,239 82.6


Exhibit 10:Key assumptions

FY2008 FY2009 FY2010 FY2011 FY2012E FY2013EOrder inflow 1,183 2,649 2,912 2,363 905 2,271

Revenue 899 1,074 1,257 2,209 2,602 2,585

Order backlog (Y/E) 2,764 4,339 5,994 6,965 5,267 4,954

Order bookto-sales ratio (x) 3.1 4.0 4.8 3.2 2.0 1.9


Exhibit 11:BOT assumptions

Project ARRIL AJIT MNEL NSEL DPTL MBCPNL RPTL BHTL HYTLType Toll Toll Toll Annuity Toll Entry Fees Toll Toll Toll

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

KM 76 66 100 57 97 - 66 100 35

Issuing Auth. AUDA MSRDC NHAI NHAI NHAI MSRDC NHAI NHAI NHAI

State Gujarat Mah. Mah. MP Mah./MP Mah. Haryana Karnataka AP

Concession (Yrs) 20 24 20 20 18 25 25 20 23Con. Start Jan-07 Jan-07 Dec-09 May-07 Dec-09 Apr-12 Sep-10 Mar-13 Aug-10

Con. End Jan-27 Jul-30 Dec-29 Nov-27 Dec-27 Aug-34 Sep-35 Sep-30 Aug-33

TPC (`cr) 515.0 277.0 753.0 269.8 1,420.0 1,426.4 1,213.6 1,257.1 480.2

Equity (`cr) 74.0 83.0 52.0 31.5 355.0 285.4 242.8 137.0 100.0

Debt (`cr) 405.0 194.0 650.0 238.3 1,065.0 1,141.0 970.8 846.5 380.2

Grant (`cr) 36.0 - 51.0 - - - - 273.6 -

Traffic Growth (%) 5.0 5.0 5.0 - 5.0 5.0 5.0 5.0 5.0

Toll inc (%) 5.0 5.0 5.0 - 5.0 5.0 5.0 5.0 5.0

Interest Rate (%) 11.0 11.0 11.0 8.9 11.8 12.8 12.3 10.5 12.8



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February 6, 2012 8

Exhibit 12:Angel EPS forecast vs. consensus

Angel Forecast Bloomberg consensus Variation (%)FY2012E 9.3 9.6 (3.0)

FY2013E 9.2 10.2 (10.2)Source: Company, Angel Research

Investment arguments

Sound balance sheet: SEL has a sound balance sheet with parent net debt/equity0.6x as of 2HFY2012 only company in our universe to have reduced its debt in

FY2011. The companys working capital position (73 days 1HFY2012) is also

much better than its peers. This has insulated the companys earnings to a great

extent in such an exorbitant interest rate scenario, which has been the key concern

for the decline in the sectors earnings, and has aided the company to outperform

on the bourses.

Funds tied up for projects in hand: SEL had successfully raised `400cr throughstake dilution (22.2% in August 2010) in SIPL. This has made SEL fully tied up for

the projects in hand. This money raising was a timely development for SEL, given

its then huge equity commitment towards under development projects. Also, this

helped the company to focus on execution of projects, which is SELs forte, leading

to early completion of projects a rare phenomenon in the industry.

Key concernsInterest rate: Road BOT projects are vulnerable to interest rate fluctuations, andany hike in interest rates would increase SELs interest costs.

Commodity risks: Road players are facing pressures from the recent price inflationin 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 orderinflow for road-focused players such as SEL.


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February 6, 2012 9

Exhibit 13:Recommendation summary

Company CMP TP Rating Top line (` cr) EPS (`) Adj. P/E OB/FY11 FY12E FY13E CAGR (%) FY11 FY12E FY13E CAGR (%) FY11 FY12E FY13E Sales(x)

ABL 202 245 Buy 1,302 1,648 1,853 19.3 19.2 21.7 25.4 15.2 10.6 9.3 8.0 4.2CCCL 18 - Neutral 2,199 2,350 2,451 5.6 2.5 (1.1) 1.6 (20.5) 6.9 - 10.9 2.7

HCC 25 - Neutral 4,093 3,915 4,633 6.4 1.2 (3.1) 0.6 (25.8) 21.0 - 38.2 4.0

IRB Infra 178 182 Neutral 2,438 3,176 3,781 24.5 13.6 14.2 13.1 (2.0) 13.1 12.6 13.7 -

ITNL 215 227 Accu. 4,049 5,169 6,609 27.8 22.3 24.4 25.7 7.4 9.6 8.8 8.4 5.2

IVRCL 57 56 Neutral 5,651 5,598 6,458 6.9 5.9 3.8 4.6 (11.5) 9.6 15.1 12.3 4.5

JP Assoc. 78 88 Accu. 13,832 13,763 16,017 7.6 5.5 2.7 4.2 (12.6) 14.1 28.4 18.5 -

L&T 1,383 1,608 Buy 43,905 53,779 60,258 17.2 54.3 63.7 70.9 14.2 25.5 21.7 19.5 3.3

Madhucon 61 77 Buy 1,816 1,952 2,503 17.4 5.6 4.4 4.7 (8.1) 11.0 13.8 13.0 3.8

NCC 61 59 Neutral 5,074 5,095 5,749 6.4 6.4 3.6 3.8 (22.4) 9.6 17.3 16.0 3.4

Patel Engg 111 - Neutral 3,476 3,271 3,586 1.6 17.6 14.0 14.5 (9.2) 6.3 7.9 7.7 2.7

Punj Lloyd 57 - Neutral 7,850 9,585 10,592 16.2 (5.4) 1.9 2.9 - - 29.8 19.5 3.3

Sadbhav 141 157 Accu. 2,209 2,602 2,585 8.2 8.0 9.3 9.2 7.3 17.7 15.2 15.4 2.7Simplex In. 199 233 Buy 4,889 5,562 6,485 15.2 21.5 18.9 25.9 9.8 9.3 10.5 7.7 3.1


Exhibit 14:SOTP break-up

Company Core Const. Real Estate Road BOT Invst. In Subsidiaries Others Total` % to TP ` % to TP ` % to TP ` % to TP ` % to TP `

ABL 10442 - - 141 58 - - - - 245

CCCL 17 100 - - - - - - - - 17HCC 4 12 12 37 16 51 - - - - 32

IRB Infra 116 64 - - 61 34 4 2 - 182

ITNL 59 26 - - 143 63 - - 25 11 227

IVRCL 37 66 - - - - 19 34 - - 56

JP Assoc. 31 35 24 27 - - - - 33 37 88

L&T 1,276 79 - - - - 332 21 - - 1,608

Madhucon 23 30 2 3 52 68 - - - 77

NCC 31 52 2 3 8 14 - - 18 31 59

Patel Engg 55 51 17 16 16 15 - - 19 18 106

Punj Lloyd 47 100 - - - - - - - - 47

Sadbhav 83 53 - - 75 47 - - - - 157Simplex In. 233 100 - - - - - - - - 233



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February 6, 2012 10

Profit & loss statement (Standalone)

Y/E March (` cr) FY2008 FY2009 FY2010 FY2011 FY2012E FY2013ENet Sales 899 1,074 1,257 2,209 2,602 2,585Other operating income - - - - - -Total operating income 899 1,074 1,257 2,209 2,602 2,585% chg 84.1 19.5 17.0 75.8 17.8 (0.7)

Total Expenditure 798 954 1,119 1,983 2,333 2,311

Net Raw Materials 234 276 211 160 174 164

Other Mfg costs 524 625 843 1,707 2,051 2,037

Personnel 39 51 66 116 108 111

Other 2 1 (1) 0 - -

EBITDA 100 120 138 226 270 274% chg 65.8 19.7 14.7 64.0 19.4 1.4

(% of Net Sales) 11.2 11.2 11.0 10.2 10.4 10.6

Depreciation& Amortisation 14 16 23 27 31 35

EBIT 86 104 114 199 238 239% chg 89.5 20.8 9.7 73.9 19.8 0.2

(% of Net Sales) 9.6 9.7 9.1 9.0 9.2 9.2

Interest & other Charges 16 21 33 43 54 48

Other Income 4 12 17 20 39 95

(% of PBT) 5.2 12.4 17.0 11.1 17.6 33.2

Share in profit of Associates - - - - - -

Recurring PBT 75 95 98 176 224 286% chg 79.4 27.0 3.5 79.4 27.3 27.7

Extraordinary Expense/(Inc.) - - - - - -

PBT (reported) 75 95 98 176 224 286Tax 23.6 19.2 44.1 56.2 72.6 92.7

(% of PBT) 31.7 20.3 45.0 32.0 32.4 32.4

PAT (reported) 51 75 54 120 151 193 Add: Share of earnings of asso - - - - - -

Less: Minority interest (MI) - - - - - -

Prior period items - - - - - -

PAT after MI (reported) 51 75 54 120 151 193ADJ. PAT 51 75 54 120 139 138% chg 72.5 48.0 (28.6) 122.1 16.2 (1.0)(% of Net Sales) 5.7 7.0 4.3 5.4 5.3 5.3

Reported EPS (`) 4.1 6.0 4.3 8.0 10.1 12.9Adj. EPS (`) 3.4 5.0 3.6 8.0 9.3 9.2% chg 72.5 48.0 (28.6) 122.1 16.2 (1.0)


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February 6, 2012 11

Balance sheet (Standalone)Y/E March (` cr) FY2008 FY2009 FY2010 FY2011 FY2012E FY2013ESOURCES OF FUNDSEquity Share Capital 13 13 13 15 15 15Preference Capital - - - - - -

Reserves& Surplus 274 331 379 611 751 934

Shareholders Funds 286 343 392 626 766 949Minority Interest - - - - - -Total Loans 150 211 424 396 515 445

Deferred Tax Liability 10 11 14 16 16 16

Total Liabilities 446 566 830 1,038 1,297 1,410APPLICATION OF FUNDSGross Block 241 261 332 372 412 456

Less: Acc. Depreciation 98 106 122 142 173 208

Net Block 143 155 210 230 238 248Capital Work-in-Progress - - - - - -

Goodwill - - - - - -

Investments 120 125 144 326 381 477Current Assets 434 592 1,009 1,434 1,720 1,731

Inventories 85 28 54 69 88 94

Debtors 154 278 441 687 874 885

Cash 10 10 45 85 62 156

Loans & Advances 168 276 467 586 690 589

Other 16 1 3 7 6 6

Current liabilities 253 306 534 952 1,043 1,046

Net Current Assets 181 286 476 482 678 686Misc. Exp. not written off 2 1 - - - -

Total Assets 446 566 830 1,038 1,297 1,410


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February 6, 2012 12

Cash flow statement (Standalone)Y/E March (` cr) FY2008 FY2009 FY2010 FY2011 FY2012E FY2013EProfit Before Tax 75 95 98 176 224 286

Depreciation 14 16 23 27 31 35Change in Working Capital 127 105 155 (34) 218 (86)

Less: Other income 6 - 17 20 39 95

Direct taxes paid 24 19 44 56 73 93

Cash Flow from Operations (68) (14) (95) 161 (75) 219(Inc.)/ Dec. in Fixed Assets (39) (19) (72) (39) (40) (44)

(Inc.)/ Dec. in Investments (74) (4) (20) (182) (55) (95)

Other income 6 - 17 20 39 95

Cash Flow from Investing (108) (23) (74) (202) (56) (44)Issue of Equity 90 - - 123 - -

Inc./(Dec.) in loans 77 61 213 (28) 119 (70)

Dividend Paid (Incl. Tax) 6 6 6 10 11 11

Others 0 (18) (3) (3) - -

Cash Flow from Financing 161 37 204 81 108 (80)Inc./(Dec.) in Cash (15) (0) 35 40 (22) 94

Opening Cash balances 25 10 10 45 85 62Closing Cash balances 10 10 45 85 62 156


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February 6, 2012 13

Key Ratios

Y/E March FY2008 FY2009 FY2010 FY2011 FY2012E FY2013EValuation Ratio (x)P/E (on FDEPS) 41.6 28.1 39.3 17.7 15.2 15.4

P/CEPS 32.7 23.3 27.5 14.5 12.4 12.3

P/BV 7.4 6.2 5.4 3.4 2.8 2.2

Dividend yield (%) 0.3 0.3 0.3 0.4 0.4 0.4

EV/Sales 2.5 2.2 2.0 1.1 1.0 0.9

EV/EBITDA 22.5 19.3 18.1 10.8 9.5 8.8

EV / Total Assets 5.1 4.1 3.0 2.3 2.0 1.7

Per Share Data (`)EPS (Basic) 4.1 6.0 4.3 8.0 10.1 12.9

EPS (fully diluted) 3.4 5.0 3.6 8.0 9.3 9.2

Cash EPS 4.3 6.1 5.1 9.8 11.4 11.5DPS 0.4 0.4 0.4 0.5 0.5 0.5

Book Value 19.1 22.9 26.1 41.8 51.1 63.3

DuPont AnalysisEBIT margin 9.6 9.7 9.1 9.0 9.2 9.2

Tax retention ratio 0.7 0.8 0.5 0.7 0.7 0.7

Asset turnover (x) 2.8 2.2 1.9 2.5 2.4 2.1

ROIC (Post-tax) 18.5 16.8 9.4 15.6 14.7 13.0

Cost of Debt (Post Tax) 9.6 9.4 5.7 7.1 8.0 6.8

Leverage (x) 0.4 0.5 0.8 0.7 0.5 0.4

Operating ROE 22.1 20.7 12.2 21.8 18.4 15.7

Returns (%)ROCE (Pre-tax) 25.6 20.6 16.4 21.3 20.4 17.6

Angel ROIC (Pre-tax) 27.0 21.0 17.1 22.9 21.8 19.2

ROE 23.5 23.9 14.7 23.5 20.0 16.0

Turnover ratios (x) Asset Turnover (Gross Block) 4.1 4.3 4.2 6.3 6.6 6.0

Inventory / Sales (days) 22 19 12 10 11 13

Receivables (days) 58 73 104 93 109 124

Payables (days) 104 89 128 125 136 145

W.cap cycle (ex-cash) (days) 43 76 103 68 71 81

Solvency ratios (x)Net debt to equity 0.5 0.6 1.0 0.5 0.6 0.3

Net debt to EBITDA 1.4 1.7 2.8 1.4 1.7 1.1

Interest Coverage 5.5 4.9 3.5 4.7 4.4 5.0


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Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com

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Disclosure of Interest Statement Sadbhav Engg

1. Analyst ownership of the stock No

2. Angel and its Group companies ownership of the stock No

3. Angel and its Group companies' Directors ownership of the stock No

4. Broking relationship with company covered No

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

Ratings (Returns): Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)Reduce (-5% to 15%) Sell (< -15%)

Sadbhav Engineering Result Updated

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