Buy Sadbhav Engineering, target Rs 360 : HDFC Securities

HDFC Securities has Buy call on Sadbhav Engineering Ltd. with a target price of Rs 360 .The current market price of Sadbhav Engineering Ltd. is 312.75
SEL reported 4QFY17 RPAT beat of 64%, led by strong revenue growth (20.4% YoY). Revenue is expected to ramp up further, as execution of three (out of seven) HAM projects has begun, two more projects will start contributing from 2QFY18E and the balance two by 3QFY18E. SEL’s net debt has increased to Rs 16.3bn (+Rs 2.7bn QoQ), as it paid Rs 1.6bn mobilisation advance to NHAI. Debtors continue to remain at Rs 16.7bn, and are expected to decrease as the HAM project’s execution picks up in FY18E.
SEL has guided for Rs 60-70bn of new orders during FY18E. The balance sheet remains stable, with net d/e at Rs 0.98x vs 0.85x during 3QFY17. SEL expects to reduce debt by Rs 4.5bn in FY18E.
SEL has maintained its FY18E revenue guidance of Rs 38bn+. We cut FY18-19E EPS by 4-7% to factor in higher interest/taxes. Upgrade SEL to BUY from NEU with a TP of Rs 360 per share.