Sadbhav Engineering’s (SEL) topline declined 7.5% YoY to Rs 1,021.7 crore, below our estimates of Rs 1,146.3 crore possibly on account of weak execution in Q4FY19. EBITDA margin expanded 118 bps YoY to 12.4%, slightly better than our estimates of 12.0%. PAT declined sharply by 58.7% YoY to Rs 28.9 crore in Q4FY19 on account of higher tax expenses (64.6% in Q4FY19 vs. nil tax expense in Q4FY18). However, at PBT level it grew 16.9% YoY to Rs 81.6 crore (our estimate: Rs 93.2 crore). Hence, we maintain our BUY recommendation on the stock with an SOTP based target price of Rs 300/share.
We now value SEL’s 69% stake in SIPL at Rs 105/share and EPC business at Rs 196/share (9.0x FY21E EV/EBITDA implying PE multiple of 13.5x FY21E EPS).