1QFY2014 Result Update | Infrastructure

August 14, 2013

Sadbhav Engineering
Performance Highlights
Quarterly highlights - Standalone
Y/E March (` cr) Net sales Operating profit Net profit 1QFY14 563 58 16 1QFY13 421 39 52 % chg (yoy) 33.6 47.8 (69.2) 4QFY13 702 52 12 % chg (qoq) (19.7) 10.8 39.5

BUY
CMP Target Price
Investment Period
Stock Info Sector Market Cap (` cr) Net Debt (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (` ) BSE Sensex Nifty Reuters Code Bloomberg Code Infrastructure 1,054 750 0.9 156/65 18,825 1 19,368 5,742 SADE.BO SADE@IN

`70 `99
12 Months

Source: Company, Angel Research

For 1QFY2014, Sadbhav Engineering (SEL) reported a poor set of numbers which were below our estimates. SELs performance on the revenue front was decent; however owing to high interest burden, earnings were below our estimate. SEL has an order book of `9,602cr (4.9x tailing revenues) as of 1QFY2014, which provides good revenue visibility. Execution momentum picks up: On the top-line front, SEL reported a revenue growth of 33.6% yoy to `563cr in 1QFY2014 as against our estimate of `591cr. This was mainly on account of pick up in the pace of execution in the remaining under-construction projects (mainly Chhindwara project, which contributed ~`225cr) and lower base of last year. On the margin front, the company posted an EBITDAM of 10.3%, up 98bp yoy, but was slightly lower than our estimate of 10.6%. The interest cost grew by 61.9% yoy to `28cr and was higher than our estimate by 25.3%. On the bottom-line front, the companys PAT reported a decline of 69.2% yoy to `16cr in 1QFY2014 against our estimate of `23cr. This was mainly due to lower-than-expected operational performance and higher interest expense during the quarter. Outlook and valuation: The Management has given a revenue guidance of `2,500cr for FY2014. It expects the recently won BOT projects Gomti-kaChauraha, Solapur-Bijapur, Rohtak-Hissar and Rajsamand-Bhilwara to contribute to E&C revenue. Given the healthy order book (4.9x trailing revenue), we expect the company to report revenues of `2,462cr and `2,731cr for FY2014 and FY2015 respectively. We continue to maintain our Buy view on the stock with a SOTP based target price of `99, owing to robust order backlog of `9,602cr (4.9x trailing revenues), strong balance sheet and on the expectation that the company would be able to meet the equity requirement for its under-construction/development projects through internal accruals or securitisation. 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) OB/Sales (x) Order inflows % chg
Source: Company, Angel Research

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 48.9 21.2 19.6 10.3

Abs. (%) Sensex Sadbhav

3m (1.8)

1yr 9.2

3yr 6.6 (52.9)

(39.2) (47.7)

FY2012 2,676 21.1 141 17.5 10.8 9.3 7.4 1.4 20.3 23.1 0.2 1.7 2.8 3,265 2.7

FY2013A 1,811 (32.3) 13 (90.7) 8.6 0.9 80.3 1.3 1.6 8.9 0.4 4.9 5.6 4,400 34.8

FY2014E 2,462 36.0 79 507.1 10.6 5.3 13.2 1.2 9.2 14.0 0.3 3.1 4.9 4,439 0.9

FY2015E 2,731 10.9 90 13.9 10.6 6.0 11.6 1.1 9.6 14.4 0.3 3.0 5.1 4,606 3.8

Viral Shah
022-39357800 Ext: 6842 viralk.shah@angelbroking.com

Please refer to important disclosures at the end of this report

Sadbhav Engineering | 1QFY2014 Result Update

Exhibit 1: 1QFY2014 performance (Standalone)

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

1QFY14 563 505 58 10.3 28 10 4 25 9 16 2.9 0.1

1QFY13 421 382 39 9.3 17 8 3 61 78 26 52 12.4 0.3

% chg (yoy) 33.6 32.2 47.8 98bp 61.9 24.5 55.1 (68.1) (65.8) (69.2) (957)bp (69.2)

4QFY13 702 649 52 7.4 29 8 3 18 7 12 1.6 0.1

% chg (qoq) (19.7) (22.2) 10.8 282bp (6.0) 23.2 32.2 36.2 30.5 39.5 122bp 39.5

FY2013 1,811 1,655 156 8.6 84 32 10 61 111 37 74 4.1 0.5

FY2012 2,676 2,385 290 10.8 65 27 11 209 68 141 5.3 0.9

% chg (32.3) (30.6) (46.3) (225)bp 29.6 16.0 (4.4) (46.9) (45.9) (47.3) (116)bp (47.3)

Exhibit 2: Actual vs Estimates

Particulars (` cr) Revenues EBITDA Interest Tax PAT
Source: Company, Angel Research

Estimates 591 63 22 12 23

Actual 563 58 28 9 16

Variation (%) (4.7) (7.8) 25.3 (25.3) (29.2)

Execution momentum picks up

On the top-line front, SEL reported a revenue growth of 33.6% yoy to `563cr in 1QFY2014 against our estimate of `591cr. This was mainly on account of pick up in the pace of execution in the remaining under-construction projects (mainly Chhindwara project, which contributed ~`225cr) and lower base of last year. A majority of the contribution came from the road segment `413.7cr (`142.3cr from BOT projects and `217.4cr from cash contracts), while irrigation and mining contributed `90.5cr and `56.9cr, respectively.

Operational BOT projects Toll collection

On the toll collection front, for 1QFY2014, SEL reported a decline of 4.5% yoy for the Ahmedabad Ring road project to `19.3cr and a growth of 14.0% yoy for the Aurangabad-Jalna project to `8.2cr. The toll collection stood at `21.4lakh/day for the Ahmedabad Ring road project; `9.1lakh/day for the Aurangabad Jalna project and `27-28lakh/day for the Bijapur-Hungund project.

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Sadbhav Engineering | 1QFY2014 Result Update

Exhibit 3: Execution continues to improves

1000 900 800 700 600 500 400 300 200 100 0 52.0 33.6 60.0 40.0 20.0 (13.6) (31.2) 421 (22.8) (22.4) 353 702 563 (20.0) (40.0) (60.0) 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 Sales (` cr, LHS) Growth (yoy %, RHS)

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

100 90 80 70 60 50 40 30 20 10 0 FY2010 FY2011 FY2012 FY2013 FY2014E Road Irrigation Mining FY2015E 77.9 77.5 83.8 70.6 70.5 69.8 16.1 6.0 12.6 10.0 8.2 8.0 15.8 13.6 14.2 15.3 14.6 15.6

724

905

335

(51.2)

Source: Company, Angel Research

Source: Company, Angel Research

Project update
Dhule-Palesnar project: The commercial operation date (COD) for the balance 25% of the Dhule-Palesnar project has been issued by the NHAI which is November 2, 2012. However, tolling on the balance 25% portion will start in 2QFY2014, since it has just received the final fee validation letter from the NHAI. The average collection from the Dhule-Palesner project is ~`24.9lakh/day (up 16% yoy). Further, SEL expects toll revenue of ~`36-38lakh/day, once all the three sections of the project are operational (expected in 2QFY2014). Maharashtra border check post project: An approval for commercial operation for four check posts has been received by the company. The company has commenced tolling in two check posts and expects to start toll collection in 2QFY2014 for the remaining check post. Further, another four check posts are expected to be operational by March 2014 and the company is expecting an average toll revenue to the tune of ~`35lakh/day in FY2014. Bijapur-Hungund: During the quarter, the Bijapur-Hungund project has commenced toll collection w.e.f May 2, 2012. Currently, the project has a daily toll collection of `27.2lakh/day. Hyderabad-Yadgiri: The COD for the 100% of Hyderabad-Yadgiri project has been issued by the NHAI. The company has started toll collection on the balance 25% portion from December 10, 2012. During the quarter, the project had a toll rate hike of 6.5% yoy w.e.f April 2013 and has a daily toll collection of `10.6lakh/day. Rohtak Panipat: The scheduled time for completion of the project is October 2013. However the company has already completed 98% of construction work and expects early completion of the project. Chhindwara project: Execution momentum has picked up from June 2012. During the quarter, SEL has booked revenues of ~`225cr in 1QFY2014. Shreenathji-Udaipur: The company has received the appointed date (April 18, 2013) for the Shreenathji Udaipur project and has started construction activity on the project. The company has already completed ~15.0% of construction work during the quarter.

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Sadbhav Engineering | 1QFY2014 Result Update

Under-development projects
During the quarter, SEL has bagged an order worth `64.6cr from DMRC for construction of depot cum workshop, RCC elevated ramp, boundary wall, and land development at Badli. The company has also bagged a project worth ~`133cr in the irrigation sector from the Government of Uttar Pradesh. The company has completed 86% of the land acquisition for the Rohtak-Hissar project. The Management expects to achieve environment clearance by October 2013 post which it would commence construction on the project. The estimated total project cost is `1,210cr which includes a grant of ~`215cr and has a concession period of 22 years.

High interest cost dents PAT growth

On the margin front, the company posted an EBITDAM of 10.3%, up 98bp yoy but was slightly lower than our estimate of 10.6%. Interest cost grew by 61.9% yoy to `28cr and was higher than our estimate by 25.3%. On the bottom-line front, the companys PAT reported a decline of 69.2% yoy to `16cr in 1QFY2014 against our estimate of `23cr. This was mainly due to lower-than-expected operational performance and higher interest expense during the quarter.

Exhibit 5: EBITDAM lower than estimated

100 90 80 70 60 50 40 30 20 75 86 39 31 33 52 10 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 EBITDA (` cr, LHS) EBITDAM (%, RHS) 58 10.4 9.5 9.3 9.4 9.4 7.4 10.3 12.0 10.0 8.0 6.0 4.0 2.0 -

Exhibit 6: High interest cost hurts profitability

50 40 5.2 30 20 10 42 47 6 0 (10) (20) 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 (2.0) -9 1.9 1.1 4 1.6 12 16 2.9 5.8 7.0 6.0 5.0 4.0 3.0 2.0 1.0 (1.0) (2.0) PAT (` cr, RHS) PATM (%, RHS) (3.0)

Source: Company, Angel Research

Source: Company, Angel Research

Equity requirement for BOT projects

SELs subsidiary, Sadbhav Infrastructure Project Ltd (SIPL), has a total equity requirement of `695cr (including Solapur-Bijapur, Gomti-ka-Chauraha and Rajsmand-Bhilwara projects) over the period of next three years. SEL is confident of funding this requirement from internal accruals and through securitization of its two BOT assets- Ahmedabad Ring road (already achieved in 1QFY2014) and Nagpur-Seoni BOT project. For the recently won Solapur-Bijapur, Gomati-kaChauraha and Rajsmand-Bhilwara projects, SEL would invest equity of ~`315cr during FY2014, out of which it has already infused `235cr in 1QFY2014.

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Sadbhav Engineering | 1QFY2014 Result Update

Outlook and valuation

Exhibit 7: Change in estimates
FY2014E Earlier Estimates Revenue EBITDA Margin Adj. PAT
Source: Company, Angel Research

FY2015E Variation (%) 0.0 0.0 (10.6) Earlier Estimates 2,731 10.6 101 Revised Estimates 2,731 10.6 90 Variation (%) 0.0 0.0 (10.0)

Revised Estimates 2,462 10.6 79

2,462 10.6 89

The Management has given a revenue guidance of `2,500cr for FY2014. It expects the recently won BOT projects Gomti-ka-Chauraha, Solapur-Bijapur, Rohtak-Hissar and Rajsamand-Bhilwara to contribute to E&C revenue. Given the healthy order book (4.9x trailing revenue), we expect the company to report revenues of `2,462cr and `2,731cr for FY2014 and FY2015 respectively. We continue to maintain our Buy view on the stock with a SOTP based target price of `99, owing to robust order backlog of `9,602cr (4.9x trailing revenues), strong balance sheet and on expectation that the company would be able to meet the equity requirement for its under-construction/development projects through internal accruals or securitisation.

Exhibit 8: SOTP break-up

Particulars Engg. & Construction biz Total Road BOT projects Ahmedabad Ring Road Aurangabad- Jalna Mumbai-Nashik Nagpur-Seoni Dhule-Palasner Maharashtra Border Rohtak Panipat Bijapur- Hungund Hyderabad-Yadgiri Solapur Bijapur Shreenathji-Udaipur Rajsamand-Bhilwara Total SIPL value SEL's stake in SIPL @ 80% Net debt Grand Total
Source: Company, Angel Research (651) 1,938

Segment Construction

Value (` cr) Value /share (`) Proportionate stake (%) Basis

362 362 24 24 18 12 5 1 4 15 19 8 6 20 24 14 148 118 (43) 99 24.2 P/E of 4x one year rolling forward earnings 24.2 18.5 NPV at CoE of 14% 12.3 NPV at CoE of 14% 5.1 NPV at CoE of 14% 1.2 NPV at CoE of 14% 4.1 NPV at CoE of 14% 15.0 NPV at CoE of 14% 19.7 NPV at CoE of 14% 8.2 NPV at CoE of 14% 6.5 NPV at CoE of 14% 19.9 NPV at CoE of 14% 24.6 NPV at CoE of 14% 14.1 NPV at CoE of 14% 149.2 119.4 (43.6) Standalone net debt 100.0

Toll Toll Toll Annuity Toll Toll Toll Toll Toll Toll Toll Toll

277 184 76 18 61 225 294 123 96 297 367 210 2,228

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Sadbhav Engineering | 1QFY2014 Result Update

Exhibit 9: Key assumptions

FY2010 FY2011 FY2012 Order inflow Revenue Order backlog (Y/E) Order bookto-sales ratio (x)
Source: Company, Angel Research

FY2013 FY2014E FY2015E 4,400 1,811 10,143 5.6 4,439 2,458 12,124 4.9 4,606 2,727 14,003 5.1

2,911 1,257 5,994 4.8

3,180 2,209 6,965 3.2

3,265 2,676 7,554 2.8

Exhibit 10: 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 Oper. 100 NHAI Mah. 20 Dec-09 Dec-29 753.0 52.0 650.0 51.0 5.0 5.0 11.0 NSEL Annuity Oper. 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.

Oper. Under Dev.

Source: Company, Angel Research

Exhibit 11: Angel EPS forecast vs consensus

Angel Forecast FY2014E FY2015E
Source: Company, Angel Research

Bloomberg consensus 5.5 8.3

Variation (%) (4.3) (27.8)

5.3 6.0

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Sadbhav Engineering | 1QFY2014 Result Update

Investment arguments
Sound balance sheet: SEL has a sound balance sheet with parent net debt/equity of 0.8x as of FY2013. The companys working capital position is also much better than its peers. This has insulated the companys earnings to a great extent in the prevailing high interest rate scenario (which has been a key concern impacting 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 through stake dilution in SIPL (22.2% in August 2010). With the money raised, SEL is fully tied up for the projects in hand. This money raising was a timely move by SEL, given its then huge equity commitment towards under-development projects. Also, this helped the company to focus on project execution, which is SELs forte, leading to early completion of projects which is a rare phenomenon in the industry.

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 pressure 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.

Company background
SEL was incorporated in 1988. The company is a leading EPC and infrastructure development company based in Ahmedabad. SEL is present in the roads and highways (65% of order book), irrigation (15%) and mining (20%) sectors. The company forayed into the road sector in 1995 and has since then executed several projects for NHAI and state governments. Currently, SEL is one of the largest BOT players in India with 11 projects in its portfolio through its 80.0% owned subsidiary, SIPL.

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Sadbhav Engineering | 1QFY2014 Result Update

Exhibit 12: Recommendation summary

Company ABL CCCL IRB Infra ITNL IVRCL JP Assoc. L&T NCC Punj Lloyd Sadbhav Simplex In. Unity Infra CMP 54 7 74 125 11 33 21 26 70 50 20 TP Rating FY13 60 Accumulate 106 156 41 27 99 Neutral Buy Buy Neutral Buy Buy Buy Neutral Buy Neutral Neutral 1,853 1,931 3,687 6,645 3,759 Top line (` cr) FY14E 1,912 2,281 3,805 7,423 5,673 2,131 2,492 4,248 7,970 5,892 7.2 5.3 EPS (`) 5.0 0.7 15.0 30.3 (1.7) 1.2 46.9 2.4 0.9 5.3 11.9 9.3 5.5 2.0 15.8 31.9 (2.0) 2.7 52.2 2.6 1.0 6.0 18.7 9.6 1.3 (3.0) 9.2 4.1 8.0 2.4 177.2 31.9 (12.4) 10.0 (2.1) 4.4 4.7 13.5 17.8 8.7 80.3 4.6 1.6 P/E 10.7 10.1 4.9 4.1 27.1 17.0 8.8 30.5 13.2 4.2 2.1 9.8 3.4 4.7 3.9 12.4 15.3 8.3 25.6 11.6 2.7 2.0 OB/ 2.2 2.2 2.1 2.2 4.6 2.5 3.2 1.8 4.9 2.7 1.9 FY15E CAGR (%) FY13 FY14E FY15E CAGR (%) 13.6 (3.3) 7.3 16.7 9.5 26.8 8.4 (3.3) 5.4 6.8 22.8 2.5 2.4 0.9 10.6 44.8 11.7 (0.2) 9.2 10.8 7.1 12.5 FY13 FY14E FY15E Sales(x)

13,415 12,946 14,897 60,873 66,532 74,520 5,725 1,811 5,897 2,040 6,044 2,462 6,308 2,146 6,533 2,731 7,033 2,339 11,408 12,726 14,226

798 1,002

Source: Company, Angel Research

Exhibit 13: SOTP break-up

Company ` Core Const. % to TP 30 100 28 37 32 37 73 48 100 24 100 100 ` 15 18 16 30 58 6 15 731 13 44 24 75 27 Real Estate % to TP 37 ` 42 76 98 7 75 Road BOT % to TP 70 72 63 26 76 Invst. In Subsidiaries ` 13 271 % to TP 68 27 ` 11 7 Others % to TP 27 26 Total ` 60 16 106 156 19 41 1,002 27 44 99 75 27

ABL
CCCL IRB Infra ITNL IVRCL JP Assoc. L&T NCC Punj Lloyd Sadbhav Simplex In. Unity Infra

Source: Company, Angel Research

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Sadbhav Engineering | 1QFY2014 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 (excl. income from sub.) % chg (% of Net Sales) Reported EPS (`) Fully Diluted Adj. EPS (`) % chg FY2010 FY2011 FY2012 FY2013A FY2014E FY2015E 1,257 1,257 18.4 1,120 211 843 19 47 137 26.7 10.9 23 113 23.0 9.0 33 17 17.5 97 15.8 0.6 98 44.1 45.0 54 54 53 (17.4) 4.2 4.3 4.3 (17.4) 2,209 2,209 75.8 1,972 160 1,706 34 71 238 73.9 10.8 27 211 85.9 9.5 54 19 10.8 176 80.4 176 56.2 32.0 120 120 120 124.4 5.4 8.0 8.0 87.2 2,676 2,676 21.1 2,385 330 1,916 40 99 290 22.1 10.8 27 263 24.7 9.8 65 11 5.2 209 18.7 209 68.0 32.6 141 141 141 17.5 5.3 9.3 9.3 17.2 1,811 1,811 (32.3) 1,655 225 1,295 43 93 156 (46.3) 8.6 32 124 (52.9) 6.8 84 10 20.8 50 (76.1) 60.9 111 36.8 33.2 74 74 13 (90.7) 0.7 0.9 0.9 (90.7) 2,462 2,462 36.0 2,201 308 1,756 44 94 261 67.6 10.6 37 224 81.0 9.1 119 12 10.4 118 136.4 118 38.4 32.6 79 79 79 507.1 3.2 5.3 5.3 507.1 2,731 2,731 10.9 2,441 341 1,947 49 104 289 10.9 10.6 42 248 10.5 9.1 127 14 10.2 134 13.9 134 43.8 32.6 90 90 90 13.9 3.3 6.0 6.0 13.9

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Sadbhav Engineering | 1QFY2014 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 332 122 210 144 1,009 54 441 45 467 3 534 476 830 372 142 230 327 1,435 69 687 85 575 19 949 485 1,042 444 155 288 332 1,519 88 791 56 565 18 905 614 1,235 518 187 330 538 1,622 102 888 22 594 16 954 669 1,537 592 224 368 553 1,736 115 924 27 646 24 1,001 735 1,656 666 266 400 568 1,907 127 1,018 39 697 26 1,089 818 1,786 13 379 392 424 14 830 15 611 626 400 16 1,042 15 747 762 449 23 1,235 15 817 833 673 32 1,537 15 886 901 723 32 1,656 15 966 981 773 32 1,786 FY2010 FY2011 FY2012 FY2013A FY2014E FY2015E

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Sadbhav Engineering | 1QFY2014 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 Inc./ (Dec.) in loans and adv. 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 FY2010 FY2011 FY2012 FY2013A FY2014E FY2015E 98 16 (155) (17) (44) (102) (72) (20) 17 (74) 213 (6) 4 211 35 10 45 176 20 30 (19) (56) 150 (39) (183) 19 (203) 2 (24) (6) 120 93 40 45 85 209 14 (157) (11) (68) (14) (72) (5) 11 (66) 0 48 (10) 14 52 (28) 85 56 111 32 (89) (10) (37) 7 (74) (206) 10 (270) 0 224 (10) 15 229 (35) 56 22 118 37 (61) (12) (38) 43 (74) (15) 12 (77) 50 (11) 0 39 5 22 27 134 42 (70) (14) (44) 48 (74) (15) 14 (75) 50 (11) (0) 39 12 27 39

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Sadbhav Engineering | 1QFY2014 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) WC cycle (ex-cash) (days) Solvency ratios (x) Net debt to equity Net debt to EBITDA Interest Coverage 1.0 2.8 3.4 0.5 1.3 3.9 0.5 1.4 4.0 0.8 4.2 1.5 0.8 2.7 1.9 0.7 2.5 1.9 4.2 12 104 32 103 6.3 10 93 28 69 6.6 11 101 27 65 3.8 19 169 57 121 4.4 16 134 42 100 4.3 16 130 29 99 16.3 16.9 14.5 22.5 24.2 23.5 23.1 24.6 20.3 8.9 9.2 1.6 14.0 14.3 9.2 14.4 14.7 9.6 9.0 55.0 1.9 9.3 5.7 0.8 12.1 9.5 68.0 2.5 16.5 8.9 0.7 22.0 9.8 67.4 2.5 16.6 10.3 0.5 19.8 6.8 66.8 1.3 6.1 10.0 0.6 3.6 9.1 67.4 1.6 9.6 11.5 0.8 8.2 9.1 67.4 1.6 9.9 11.5 0.8 8.7 4.3 4.3 6.1 0.4 31.3 8.0 8.0 9.8 0.6 41.8 9.3 9.3 11.2 0.6 50.7 0.9 0.9 3.0 0.6 55.2 5.3 5.3 7.7 0.6 59.7 6.0 6.0 8.8 0.6 65.0 16.3 11.4 2.2 0.6 0.4 3.5 0.6 8.7 7.1 1.7 0.9 0.2 1.8 0.4 7.4 6.2 1.4 0.9 0.2 1.7 0.4 80.3 23.4 1.3 0.9 0.4 4.9 0.5 13.2 9.0 1.2 0.9 0.3 3.1 0.5 11.6 7.9 1.1 0.9 0.3 2.9 0.5 FY2010 FY2011 FY2012 FY2013A FY2014E FY2015E

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Sadbhav Engineering | 1QFY2014 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 Pvt. 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 Pvt. 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 Pvt. 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 Pvt. 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 Pvt. 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 Pvt. 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 Pvt. 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%)

August 14, 2013

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