HDFC Securities is bullish on Sadbhav Engineering has recommended buy rating on the stock with a target price of Rs 62 in its research report dated September 04, 2020.
HDFC Securities' research report on Sadbhav Engineering
Sadbhav Engineering (SEL) reported revenue at Rs 2.3bn, decline of 73%/44% YoY/QoQ. Consequently, losses came in at Rs 266mn, against our estimated loss of Rs 212mn. Labour availability has improved to 80%. Standalone order book stood at Rs 82bn. Although, SEL could not secure any order in 1QY21, it has already won orders of Rs 16bn 2QFY21. Net debt reduced marginally to Rs 10.6bn (vs 11.2bn at FY20-end). However, with receivables of ~Rs 18bn, working capital still remains stretched.
Outlook
We maintain BUY on SEL, with an unchanged target price of Rs 62, given low valuation. Improvement in balance sheet and pick-up in execution will lead to re-rating.
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