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Nirmal Bang Report
Sadbhav Engineering Ltd. has reported weak set of numbers for Q4 FY21.
Revenue/Ebitda was 30.9%/11.1% below our estimate.
Lower execution was on account of delay in equity infusion in 3 Hybrid Annuity Model projects.
The company’s balance sheet continues to remain stretched.
To fund equity portion of the HAM projects and to repay borrowings, the company has sold a 7% stake in India InfraVit Trust and raised funds through NCDs.
While this has resolved the funding problem temporarily, we believe that the sale of HAM assets and other projects like the Maharashtra Border Check Post project and the Ahmedabad Ring Road project is imperative to sustain the EPC business.
Until then, we believe that order inflow will be limited and consequently execution will suffer.
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