Sadbhav Engineering (SEL) continued to report disappointing numbers in H1FY21 with revenue falling 54.2% YoY to Rs. 641.9 crore, largely marred by disruptions caused by Covid-19 pandemic. Operating margin fell 162 bps YoY to 10.8% for H1. At net level, the company reported loss of Rs. 21.3 crore during H1FY21 on account of lower operational revenue and higher costs.
Valuation & Outlook
While Sadbhav aims to gradually ramp up execution across its project sites with better labour availability, the company has faced pressure with persistent delays in receiving ADs, cancellation/de-scoping of projects, erroneous selection of projects, which collectively translated into substandard performance. Additionally, we do not find major comfort in its execution skills (lagging vis-à-vis peers, guidance). The decision of the merger of SEL with Sadbhav Infraprojects (SIPL) is also not fairly understandable. While reshuffling in the management team and their aim to thrive may create value over the long term horizon, we would like to witness significant progress in execution and benefits arising from the merging process. With operational issues/uncertainty still looming, we DROP COVERAGE on the stock.
For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Sadbhav_CoUpdate_Nov20.pdf
Shares of SADBHAV ENGINEERING LTD. was last trading in BSE at Rs.50.1 as compared to the previous close of Rs. 50.75. The total number of shares traded during the day was 59385 in over 583 trades.
The stock hit an intraday high of Rs. 50.7 and intraday low of 49. The net turnover during the day was Rs. 2959748.