2QFY2013 Result Update | Infrastructure

November 21, 2012

Sadbhav Engineering
Performance Highlights
Quarterly highlights - Standalone
Y/E March (` cr) Net sales Operating profit Net profit
Source: Company, Angel Research

BUY
CMP Target Price
Investment Period
% chg (yoy) (22.3) (30.7) (64.8) 1QFY13 421 39 52 % chg (qoq) (20.6) (19.7) (87.8)

`138 `168
12 Months

2QFY13 335 31 6

2QFY12 430 45 18

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 2,077 555 1.0 161/94 57,419 1 18,460 5,615 SADE.BO SADE@IN

For 2QFY2013, Sadbhav Engineering (SEL) reported a poor set of numbers, which were significantly below our and consensus estimates. SEL had an order
inflow of ~`750cr during1HFY2013, taking its order book to `7,947cr (3.4x FY2013E revenue), which provides good revenue visibility. We maintain our Buy view on the stock. Execution falters, to improve in 2HFY2013: On the top-line front, SEL reported

revenues of `335cr, indicating a decline of 22.3% yoy against our and street estimate of `387cr and `404cr respectively. This was mainly on account of slower execution pace in the remaining under-construction projects and delay in start of construction activity in newly awarded projects. On the margin front, the company posted an EBITDAM of 9.4% a dip of 113bp on yoy basis and was lower than our estimate of 10.1%. Interest cost grew by 13.8% yoy/2.9% qoq to `18cr and was in line with our estimate. On the bottom-line front, the companys PAT reported a decline of 64.8% yoy to `6cr in 2QFY2013 against our estimate of `12cr. This was mainly due to lower-than-expected revenues and higher interest expense during the quarter.
Outlook and valuation: For FY2013, SEL has reiterated a muted performance on the revenue front. It expects two recently won BOT projects Gomti ka Chauraha and Solapur Bijapur to contribute ~`300cr in FY3013. Given the poor performance in 1HFY2013 we have revised our FY2013 and FY2014 EPS estimates downwards to `7.2(from `7.5 earlier) and `8.7 (from `10.4 earlier) respectively. We continue to maintain our Buy view on the stock with a SOTP target price of `168, owing to robust order backlog of `7,947cr (3.4x FY2013E revenue), strong balance sheet and as the companys equity requirement for underconstruction/development projects is expected to be met by internal accruals. 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 47.4 22.8 18.1 11.6

Abs. (%) Sensex Sadbhav

3m 3.2 1.1

1yr 14.9 14.0

3yr 8.5 51.1

FY2011 2,209 75.8 120 122.1 10.8 8.0 17.3 3.3 23.5 22.5 1.1 10.0 3.2 2,363 (18.9)

FY2012 2,676 21.1 141 17.5 10.8 9.3 14.7 2.7 20.3 23.1 0.9 8.5 2.8 2,844 20.4

FY2013E 2,344 (12.4) 108 (23.1) 10.6 7.2 19.1 2.3 13.0 16.2 1.0 9.8 3.4 2,673 (6.0)

FY2014E 2,804 19.6 131 21.0 10.7 8.7 15.8 2.0 13.5 17.0 0.9 8.5 2.8 2,883 7.9

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

Please refer to important disclosures at the end of this report

Sadbhav Engineering | 2QFY2013 Result Update

Exhibit 1: 2QFY2013 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

2QFY13 335 303 31 9.4 18 8 2 0 9 2 6 1.9 0.4

2QFY12 430 385 45 10.5 15 7 5 28 10 18 4.2 1.2

% chg (yoy) (22.3) (21.3) (30.7) (113)bp 13.8 8.6 (52.2) (68.7) (76.0) (64.8) (231)bp (64.8)

1QFY13 421 382 39 9.3 17 8 3 61 78 26 52 12.4 3.5

% chg (qoq) (20.6) (20.7) (19.7) 11bp 2.9 (2.5) (12.0) (88.7) (90.6) (87.8) (1052)bp (87.8)

1HFY2013 756 686 70 9.3 35 15 5 61 87 28 59 7.8 3.9

1HFY2012 1,043 930 113 10.8 28 14 7 78 26 52 5.0 3.5

% chg (27.5) (26.3) (37.7) (151)bp 23.5 10.6 (21.9) 11.3 7.6 13.2 280bp 13.2

Exhibit 2: Actual vs Estimates

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

Estimates 387 39 18 6 12

Actual 335 31 18 2 6

Variation (%) (13.6) (19.7) (2.0) (59.6) (48.4)

Revenue performance disappoints

On the top-line front, SEL reported a revenue of `335cr, indicating a decline of 22.3% yoy against our and streets estimate of `387cr and `404cr respectively. This was mainly on account of slower execution pace in the remaining under-construction projects and delay in start of construction activity in newly awarded projects. Majority contribution came from the road
segment `250.8cr (`198.3cr from BOT projects and `52.5cr from cash contracts), while irrigation and mining contributed `39.9cr and `41.7cr, respectively. The upcoming opportunities in the irrigation and mining segments are 1) Irrigation: SEL has submitted bids of `1,190cr (nine projects); 2) Mining sector bids are outstanding for a total value of `2,700cr (seven projects).

Operational BOT projects Toll collection

On the toll collection front, for 2QFY2013 SEL reported a decline 2.3% yoy for the Ahmedabad Ring road project to `17.8cr and a growth of 8.8% yoy for the Aurangabad-Jalna project to `7.2cr. The daily toll collection stood at `18lakh/day for the Ahmedabad Ring road project; `7.2lakh/day for the Aurangabad Jalna project and `25.3lakh/day for the Bijapur-Hungund project.

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Sadbhav Engineering | 2QFY2013 Result Update

Exhibit 3: Revenue momentum takes a hit

1200 1000 800 600 400 1047 613 430 724 905 421 200 0 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 Sales (` cr, LHS) Growth (yoy %, RHS) 44.1 (31.2) (22.3) 65.0 52.0 128.9 (13.6) 140.0 120.0 100.0 80.0 60.0 40.0 20.0 335 (20.0) (40.0)

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

11 3 10 13 8 11 8 8 90 80 70 60 86 50 40 30 20 10 FY2008 FY2009 FY2010 FY2011 Irrigation FY2012 FY2013E FY2014E Road BOT Mining 84 78 77 81 74 12 14 14 100 6 16

Source: Company, Angel Research

Source: Company, Angel Research

Project update
Dhule Palesnar project: The commercial operational date (COD) for the balance 25% of Dhule-Palesnar project has been issued by the NHAI which is November 2, 2012. However, tolling on the balance 25% portion will start in December 2012 as it is awaiting the final fee validation letter from the NHAI. The average collection from the Dhule-Palesner project is ~`24lakh/day. Further, SEL expects toll revenue of ~`36-38lakh/day once all the three sections of the project are operational (expected by Decemeber 2013). Nagpur-Seoni project: This project will be limited to 28km as against the original length of 56km. Further, for the payment of annuity, proportionate invoice has already been raised on the NHAI. The adjusted annuity for this project would be `20cr-21cr on a semiannual basis. Maharashtra border check post project: Approval for commercial operations for three check posts has been received by the company and tolling for the same will start in December 2012. Further, another three check posts are expected to be operational by October 2013 and the company is expecting revenue to the tune of ~`27-30cr for FY2013 from these six check posts. Bijapur-Hungund: The Bijapur-Hungund project has commenced toll revenue generation from May 2, 2012. Currently, the project has a daily toll collection of `25lakh/day. Hyderabad-Yadgiri: The COD for the 100% of Hyderabad-Yadgiri project has been issued by the NHAI. However, tolling on the balance 25% portion will start in December 2012 as it is awaiting a final fee validation letter from NHAI. Further, SEL is expecting toll revenue of `62cr-`65cr during the first full year of operations. Rohtak Panipat: The scheduled time for completion of the project is October 2013. However the company has already completed `616cr 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 already booked revenues of `38cr and is expecting revenues of ~`120cr and ~`180-200cr for 3QFY2013 and 4QFY2013 respectively.

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Sadbhav Engineering | 2QFY2013 Result Update

Under-development projects
SEL has been declared a successful bidder for four-laning of the Rajsmand-Bhilwara road project on a BOT toll basis. The estimated total project cost is `720cr which includes a grant of ~`266cr and has a concession period of 30 years. The company has also achieved financial closure of two road projects Gomti ka Chauraha (TPC `1,150cr; EPC `976cr) and Solapur Bijapur (TPC `1,185; EPC `999cr). SEL expects to start construction on these projects by 4QFY2013 and is expecting `300cr E&C revenue to come from these projects in FY2013.

Lower EBITDAM and interest cost lead to lower-than-expected earnings growth

On the margin front, the company posted an EBITDAM of 9.4% a dip of 113bp on a yoy basis and was lower than our estimate of 10.1%. Interest cost grew by 13.8% yoy/2.9% qoq to `18cr and was in line with our estimate. On the bottom-line front, companys PAT reported a decline of 64.8% yoy to `6cr in 2QFY2013 against our estimate of `12cr. This was mainly due to lowerthan-expected revenues and higher interest expense during the quarter. Exhibit 5: EBITDAM lower than estimate
100.0 90.0 80.0 70.0 60.0 50.0 40.0 30.0 90.8 67.8 45.3 75.2 86.0 39.1 31.4 20.0 10.0 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 EBITDA (` cr, LHS) EBITDAM (%, RHS) 8.7 11.1 10.5 10.4 9.5 9.3 9.4 12.0 10.0 8.0 6.0 4.0 2.0 -

Exhibit 6: PAT trend

60.0 5.2 50.0 5.8 40.0 30.0 20.0 53.9 33.8 10.0 0.0 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 PAT (` cr, RHS) PATM (%, RHS) 4.2 1.9 18.1 41.7 46.9 52.4 6.4 5.5 5.2 12.4 14.0 12.0 10.0 8.0 6.0 4.0 2.0 -

Source: Company, Angel Research

Source: Company, Angel Research

Bonus income and receivable to help reduce debt by year end

As per the management, SELs parent has yet to receive `57cr bonus as its share for the early completion of the two projects (Bijapur Hungund `38cr and Dhule-Palesnar `18cr). This bonus income along with debtors payment, mainly from Dhule-Palesnar to the tune of ~`155cr from the SPV, will help the company reduce its debt by year end. Further, SEL is looking to complete Rohtak Panipat project ahead of its scheduled COD of October 2013 which will result in bonus income.

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Sadbhav Engineering | 2QFY2013 Result Update

Equity requirement for BOT projects

SELs subsidiary, Sadbhav Infrastructure Project Ltd (SIPL) has a total equity requirement of ~`1,800cr (including Solapur Bijapur, Gomti ka Chauraha and Rajsmand-Bhilwara projects), of which the company has already invested ~`878cr. SEL is confident of funding this requirement from internal accruals. For the recently won Solapur Bijapur, Gomati ka Chauraha and Rajsmand-Bhilwara projects SEL would invest equity of ~`250cr in these projects during FY2013.

Outlook and valuation

Exhibit 7: Change in estimates
FY2013E Earlier Estimates Revenues EBITDA Margins Adj. PAT
Source: Company, Angel Research

FY2014E Variation (%) (6.5) (30)bp (4.1) Earlier Estimates 3,147 10.7 157 Revised Estimates 2,804 10.7 131 Variation (%) (10.9) (16.4)

Revised Estimates 2,344 10.6 108

2,506 10.3 113

For FY2013, SEL has reiterated a muted performance on the revenue front. It expects two recently won BOT projects Gomti ka Chauraha and Solapur Bijapur to contribute ~`300cr in FY3013. Given the poor performance in 1HFY2013, we have revised our FY2013 and FY2014 EPS estimates downwards to `7.2(earlier was 7.5) and `8.7 (earlier was 10.4) respectively. We continue to maintain our Buy view on the stock with a SOTP target price of `168, owing to robust order backlog of `7,947cr (3.4x FY2013E revenue), strong balance sheet and as the companys equity requirement for under-construction/development projects is expected to be met by internal accruals.

Exhibit 8: SOTP break-up

Business Segment Construction (a) Ahmedabad Ring Road (SIPL's share 80%) Aurangabad - Jalna (SIPL's share 100%) Mumbai - Nasik (SIPL's share 20%) Nagpur - Seoni (SIPL's share 51%) Dhule - Palasner (SIPL's share 27%) Maharasthra Border (SIPL's share 90%) Rohtak - Panipat (SIPL's share 100%) Bijapur - Hungund (SIPL's share 77%) Hyderabad - Yadgiri (SIPL's share 60%) SIPL - Road BOT Projects SEL holds 80.0% stake in SIPL (b) Total (a+b)
Source: Company, Angel Research

Methodology P/E NPV NPV NPV NPV NPV NPV NPV NPV NPV

Remarks 8x FY2014E earnings CoE -14%, Traffic & Toll increase 5% each CoE -14%, Traffic 5% & Toll increase 18.5% (every 3 years) CoE -14%, Traffic & Toll increase 5% each CoE -14%, Annuity Project CoE -14%, Traffic & Toll increase 5% each CoE -14%, Traffic & Toll increase 5% each CoE -14%, Traffic & Toll increase 5% each CoE -14%, Traffic & Toll increase 5% each CoE -14%, Traffic & Toll increase 5% each

` cr
1,046 274 191 122 18 103 365 377 293 112 1,855 1,484

`/share
70 18 13 8 1 7 24 25 19 7 123 99 168

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Sadbhav Engineering | 2QFY2013 Result Update

Exhibit 9: Key assumptions

FY2009 FY2010 FY2011 Order inflow Revenue Order backlog (Y/E) Order bookto-sales ratio (x)
Source: Company, Angel Research

FY2012 FY2013E FY2014E 2,844 2,676 7,554 2.8 2,673 2,344 7,883 3.4 2,883 2,804 7,962 2.8

2,649 1,074 4,339 4.0

2,912 1,257 5,994 4.8

2,363 2,209 6,965 3.2

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 FY2013E FY2014E
Source: Company, Angel Research

Bloomberg consensus 8.8 10.0

Variation (%) (18.3) (13.0)

7.2 8.7

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Sadbhav Engineering | 2QFY2013 Result Update

Investment arguments
Sound balance sheet: SEL has a sound balance sheet with parent net debt/equity of 0.5x as of FY2012. The companys working capital position 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 through stake 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 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 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 pressures 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 (71.5% of order book), irrigation (13.2%) and mining (15.3%) 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 | 2QFY2013 Result Update

Exhibit 12: Recommendation summary

Company ABL CCCL IRB Infra ITNL IVRCL JP Assoc. L&T NCC Punj Lloyd Sadbhav Simplex In. CMP 219 12 120 185 39 89 42 50 138 181 TP Rating FY12 286 164 225 100 44 168 251 Buy Buy Buy Accu. Accu. Accu. Buy Buy 1,500 2,048 3,133 5,606 6,178 - Neutral Top line (` cr) FY13E 2,032 2,262 3,843 6,564 4,249 FY14E CAGR (%) 2,311 2,522 4,212 7,054 6,897 24.1 11.0 15.9 12.2 5.7 11.1 14.5 11.9 11.5 2.4 15.8 23.7 (0.5) 14.9 25.6 0.6 4.8 64.3 1.4 2.8 9.3 18.1 EPS (`) FY12 FY13E FY14E CAGR (%) 27.0 1.5 16.8 26.3 0.3 3.7 66.1 3.1 1.8 7.2 23.2 31.6 2.7 17.8 29.0 3.3 4.6 76.5 4.1 3.2 8.7 31.3 15.4 9.3 6.5 136.8 (2.8) 9.1 71.4 7.8 (3.5) 31.7 9.2 8.0 7.2 18.4 24.3 29.7 18.1 14.7 10.0 P/E 8.1 7.8 7.1 7.0 24.3 23.7 13.4 27.7 19.1 7.8 6.9 4.3 6.7 6.4 11.9 19.5 20.4 10.1 15.6 15.8 5.8 OB/ 2.8 2.2 2.9 1.8 5.0 2.5 3.4 2.3 3.4 2.4 FY12 FY13E FY14E Sales(x)

- Neutral

66.5 127.1

12,853 13,842 15,863 53,171 61,031 69,753 5,250 2,676 6,010 5,947 2,344 6,906 6,569 2,804 8,053 10,557 11,892 13,116

1,564 1,748

- Neutral

Source: Company, Angel Research

Exhibit 13: SOTP break-up

Company ` ABL CCCL IRB Infra ITNL IVRCL JP Assoc. L&T NCC Punj Lloyd Sadbhav Simplex In. 113 16 52 74 17 27 1,377 25 64 70 251 Core Const. % to TP 39 100 32 33 46 27 79 57 100 41 100 ` 30 Real Estate % to TP 30 ` 174 113 121 7 99 Road BOT % to TP 61 69 54 16 59 Invst. In Subsidiaries ` 4 20 371 % to TP 3 54 21 ` 30 43 12 Others % to TP 13 43 27 Total ` 286 16 164 225 37 100 1,748 44 64 168 251

Source: Company, Angel Research

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Sadbhav Engineering | 2QFY2013 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 FY2009 FY2010 FY2011 FY2012 FY2013E FY2014E 1,074 1,074 19.5 954 276 625 51 1 120 19.7 11.2 16 104 20.8 9.7 21 12 12.4 95 27.0 95 19.2 20.3 75 75 75 48.0 7.0 6.0 5.0 48.0 1,257 1,257 17.0 1,119 211 843 66 (1) 138 14.7 11.0 23 114 9.7 9.1 33 17 17.0 98 3.5 98 44.1 45.0 54 54 54 (28.6) 4.3 4.3 3.6 (28.6) 2,209 2,209 75.8 1,972 160 1,706 105 238 72.7 10.8 27 211 84.3 9.5 54 19 10.8 176 79.4 176 56.2 32.0 120 120 120 122.1 5.4 8.0 8.0 122.1 2,676 2,676 21.1 2,385 330 1,916 139 290 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 17.5 2,344 2,344 (12.4) 2,096 289 1,685 122 248 (14.6) 10.6 35 212 (19.2) 9.1 72 20 12.5 160 (23.2) (60.9) 221 71.7 32.4 149 149 108 (23.1) 4.6 9.9 7.2 (23.1) 2,804 2,804 19.6 2,505 346 2,005 154 299 20.8 10.7 45 254 19.5 9.1 77 17 8.8 194 20.9 194 62.8 32.4 131 131 131 21.0 4.7 8.7 8.7 21.0

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Sadbhav Engineering | 2QFY2013 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 261 106 155 125 592 28 278 10 276 1 306 286 1 566 332 122 210 144 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 1,235 568 191 377 449 1,451 82 750 87 516 16 888 563 1,389 728 236 491 526 1,581 90 841 70 561 20 997 584 1,601 13 331 343 211 11 566 13 379 392 424 14 830 15 611 626 400 16 1,042 15 747 762 449 23 1,235 15 891 906 459 23 1,389 15 1,011 1,027 551 23 1,601 FY2009 FY2010 FY2011 FY2012 FY2013E FY2014E

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Sadbhav Engineering | 2QFY2013 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 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 95 8 (105) (12) (19) (34) (19) (4) 12 (12) 61 (6) (10) 45 (0) 10 10 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) (10) 125 93 40 45 85 209 14 (157) (11) (68) (14) (72) (5) 11 (66) 0 48 (10) 14 52 (28) 85 56 221 35 82 (20) (72) 246 (124) (116) 20 (221) 10 (11) 5 5 31 56 87 194 45 (38) (17) (63) 121 (160) (77) 17 (220) 92 (11) 81 (17) 87 70

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Sadbhav Engineering | 2QFY2013 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 0.6 1.7 4.9 1.0 2.8 3.5 0.5 1.3 3.9 0.5 1.4 4.0 0.4 1.5 2.9 0.5 1.6 3.3 4.3 19 73 89 76 4.2 12 104 128 103 6.3 10 93 125 69 6.6 11 101 118 65 4.6 13 120 123 81 4.3 11 104 110 64 20.6 21.0 23.9 16.4 17.1 14.7 22.5 24.2 23.5 23.1 24.6 20.3 16.2 17.1 13.0 17.0 17.9 13.5 9.7 0.8 2.2 16.8 9.4 0.5 20.7 9.1 0.5 1.9 9.4 5.7 0.8 12.2 9.5 0.7 2.5 16.5 8.9 0.7 22.0 9.8 0.7 2.5 16.6 10.3 0.5 19.8 9.1 0.7 1.9 11.6 10.8 0.5 11.9 9.1 0.7 2.0 12.1 10.4 0.4 12.9 6.0 5.0 6.1 0.4 22.8 4.3 3.6 5.1 0.4 26.0 8.0 8.0 9.7 0.6 41.6 9.3 9.3 11.2 0.5 50.7 9.9 7.2 9.5 0.5 60.3 8.7 8.7 11.7 0.5 68.3 27.4 22.7 6.0 0.3 2.1 18.9 4.0 38.4 26.8 5.3 0.3 1.9 17.8 2.9 17.3 14.1 3.3 0.4 1.1 10.0 2.3 14.7 12.3 2.7 0.4 0.9 8.5 2.0 19.1 14.4 2.3 0.4 1.0 9.8 1.8 15.8 11.7 2.0 0.4 0.9 8.5 1.6 FY2009 FY2010 FY2011 FY2012 FY2013E FY2014E

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Sadbhav Engineering | 2QFY2013 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 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 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 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 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 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 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 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%)

November 21, 2012

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