3QFY2013 Result Update | Infrastructure

February 19, 2013

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) (51.3) (59.8) (91.1) 2QFY13 335 31 6 % chg (qoq) 5.6 5.4 (41.7)

`114 `157
12 Months

3QFY13 353 33 4

3QFY12 725 82 42

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 1,713 555 1.0 161/106 60,860 1 19,636 5,940 SADE.BO SADE@IN

For 3QFY2013, Sadbhav Engineering (SEL) reported a disappointing set of numbers, which were significantly below our and consensus estimates. SEL
had an order book of `8,747cr (3.3x FY2012 revenue) as of 3QFY2013, which provides good revenue visibility. We maintain our Buy view on the stock. Execution falters; to improve in FY2014: On the top-line front, SEL reported a revenue decline of 51.3% yoy to `353cr which was significantly below our and street estimate by 53% and 40% 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 companys EBITDAM declined by 200bp yoy to 9.4% against our estimate of 10.3%. Interest cost grew by 28.2% yoy/17.1% qoq to `21cr and was in line with our estimate. On the bottom-line front, the company reported a PAT of `4cr (significantly below our estimate), a decline of 91.1% yoy. This was mainly due to lower-than-expected revenue growth and higher interest expense during the

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 47.4 22.8 18.1 11.6

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 revenue from 1QFY2014. Given the poor performance in 9MFY2013, we have revised our FY2013 and FY2014 EPS estimates downwards to `3.2 (earlier estimate was of `7.2) and `7.2 (earlier estimate was of `8.2) respectively. We continue to maintain our Buy view on the stock with a SOTP target price of `157, owing to robust order backlog of `8,747cr (3.3x FY2012 revenue), strong balance sheet and as the companys equity requirement for under-construction/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

Abs. (%) Sensex Sadbhav

3m 7.1

1yr 7.4

3yr 21.3 (0.8)

(18.6) (21.1)

FY2011 2,209 75.8 120 122.1 10.8 8.0 14.3 2.7 23.5 22.5 0.9 8.5
3.2 2,363 (18.9)

FY2012 2,676 21.1 141 17.5 10.8 9.3 12.1 2.2 20.3 23.1 0.8 7.2
2.8 2,844 20.4

FY2013E 1,642 (38.6) 48 (65.7) 9.7 3.2 35.4 2.0 6.0 9.7 1.2 12.8
5.2 2,673 (6.0)

FY2014E 2,642 60.9 109 125.5 10.1 7.2 15.7 1.8 12.1 15.5 0.8 8.4
3.3 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 | 3QFY2013 Result Update

Exhibit 1: 3QFY2013 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

3QFY13 353 320 33 9.4 21 9 2 6 2 4 1.1 0.2

3QFY12 725 643 82 11.4 16 7 3 62 21 42 5.8 2.8

% chg (yoy) (51.3) (50.1) (59.8) (200)bp 28.2 24.1 (40.5) (90.8) (90.2) (91.1) (470)bp (91.1)

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

% chg (qoq) 5.6 5.7 5.4 (2) bp 17.1 11.7 (33.0) (34.6) (15.7) (41.7) (86)bp (41.7)

9MFY2013 1,109 1,006 104 9.3 55 24 7 61 93 30 63 5.6 4.2

9MFY2012 % chg (yoy) 1,768 1,573 195 11.1 44 21 10 140 47 94 5.3 6.2 (37.3) (36.0) (47.0) (172)bp 25.2 15.0 (27.3) (34.0) (35.6) (33.3) 34bp (33.3)

Exhibit 2: Actual vs Estimates

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

Estimates 753 78 18 18 38

Actual 353 33 21 2 4

Variation (%) (53.0) (57.3) 11.6 (88.8) (90.1)

Revenue performance disappoints

On the top-line front, SEL reported a revenue decline of 51.3% yoy to `353cr, which was significantly below our and street estimate by 53% and 40% 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 `237.1cr (`134.20cr from BOT projects and `102.9cr from cash contracts), while irrigation and mining contributed `49.5cr and `66.1cr, respectively. The upcoming opportunities in the irrigation and mining segments are 1) Irrigation: SEL has submitted bids of `716cr (two projects); 2) Mining sector bids are outstanding for a total value of `1,100cr (three projects).

Operational BOT projects Toll collection

On the toll collection front, for 3QFY2013, SEL reported a decline 9.5% yoy for Ahmedabad Ring road project to `19.1cr and a decline of 3% yoy for Aurangabad-Jalna project to `7.0cr. The daily toll collection stood `19.5lakh/day for the Ahmedabad Ring road project; `7.7lakh/day for Aurangabad Jalna project and `25.3lakh/day for the Bijapur-Hungund project. the the at the

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Sadbhav Engineering | 3QFY2013 Result Update

Exhibit 3: Revenue momentum takes a hit

1000 900 800 700 600 500 400 300 613 430 725 905 421 335 100 0 1QFY12 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 Sales (` cr, LHS) Growth (yoy %, RHS) 353 200 (31.2) (22.3) (51.3) 44.1 65.0 52.2 (13.6) 80.0 60.0 40.0 20.0 (20.0) (40.0) (60.0)

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 the Dhule-Palesnar project has been issued by the NHAI which is November 2, 2012. However, tolling on the balance 25% portion will start in 4QFY2013, as it is awaiting the final fee validation letter from the NHAI. The average collection from the Dhule-Palesner project is ~`20.4lakh/day. Further, SEL expects toll revenue of ~`36-38lakh/day, once all the three sections of the project are operational (expected by December 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 `20.5cr 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 4QFY2013. Further, another three check posts are expected to be operational by June 2013 and the company is expecting an average toll revenue to the tune of ~`35lakh/day in FY2015. Bijapur-Hungund: The Bijapur-Hungund project has commenced toll revenue generation from May 2, 2012. Currently, the project has a daily toll collection of `27.4lakh/day. Hyderabad-Yadgiri: The COD for the 100% of Hyderabad-Yadgiri project has been issued by the NHAI. The company has started toll collection on the balance 25% portion from December 10, 2012. Currently, the project has a daily toll collection of `11.2lakh/day. Rohtak Panipat: The scheduled time for completion of the project is October 2013. However the company has already completed `704cr 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 booked revenues of `64cr in 3QFY2013 and expects to book revenues of ~`180-200cr in 4QFY2013.

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Sadbhav Engineering | 3QFY2013 Result Update

Under-development projects
During the quarter, SEL has been declared a successful bidder for Karnatoka State highway improvement project on a BOT annuity basis. The estimated total project cost is `720cr which includes a grant of ~`239cr and has a concession period of 10 years. The company has also bagged two projects worth `682cr in the mining sector from Bharat Coking Coal. The company has also achieved financial closure of two road projects Gomti ka Chauraha (TPC `1,150cr; EPC `976cr) and Solapur Bijapur (TPC `1,185cr; EPC `999cr). SEL expects to start construction on these projects by 1QFY2014.

Slower-than-expected execution dents PAT growth

On the margin front, the companys EBITDAM decline by 200bp yoy to 9.4% against our estimate of 10.3%. Interest cost grew by 28.2% yoy/17.1% qoq to `21cr and was in line with our estimate. On the bottom-line front, the company reported a PAT of `4cr in 3QFY2013 (significantly below our estimate), indicating a decline of 91.1% yoy. This was mainly due to lower-than-expected revenue growth and higher interest expense during the quarter.

Exhibit 5: EBITDAM lower than estimate

100 80 60 40 20 68 45 82 86 39 31 33 1QFY12 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 EBITDA (` cr, LHS) EBITDAM (%, RHS) 11.1 10.5 11.4 9.5 9.3 9.4 9.4 12.0 10.0 8.0 6.0 4.0 2.0 -

Exhibit 6: Slower execution hurts profitability

60 50 40 30 20 34 10 0 1QFY12 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 PAT (` cr, RHS) PATM (%, RHS) 4.2 1.9 18 42 47 52 6 1.1 4 5.8 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

Equity requirement for BOT projects

SELs subsidiary, Sadbhav Infrastructure Project Ltd (SIPL) has a total equity requirement of ~`1,010cr (including Solapur-Bijapur, Gomti-ka-Chauraha and Rajsmand-Bhilwara projects) over a period of three-four years. SEL is confident of funding this requirement from internal accruals and through securitization of its two BOT assets- Ahmedabad Ring road and Nagpur-Seoni BOT project. For the recently won Solapur-Bijapur, Gomati-ka-Chauraha and Rajsmand-Bhilwara projects, SEL would invest an equity of ~`120cr during 4QFY2013.

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Sadbhav Engineering | 3QFY2013 Result Update

Outlook and valuation

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

FY2014E Variation (%) (34.5) (58)bp (57.2) Earlier Estimates 3,147 10.7 157 Revised Estimates 2,642 10.1 109 Variation (%) (16.1) (58)bp (30.5)

Revised Estimates 1,642 9.7 48

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 revenue from 1QFY2014. Given the poor performance in 9MFY2013, we have revised our FY2013 and FY2014 EPS estimates downwards to `3.2 (earlier estimate was `7.2) and `7.2 (earlier estimate was `8.2) respectively. We continue to maintain our Buy view on the stock with a SOTP target price of `157, owing to robust order backlog of `8,747cr (3.3x FY2012 revenue), strong balance sheet and as the companys equity requirement for underconstruction/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
870 274 191 122 18 103 365 377 293 112 1,855 1,484

`/share
58 18 13 8 1 7 24 25 19 7 123 99 157

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 1,642 8,585 5.2 2,883 2,642 8,827 3.3

2,649 1,074 4,339 4.0

2,912 1,257 5,994 4.8

2,363 2,209 6,965 3.2

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Sadbhav Engineering | 3QFY2013 Result Update

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 6.5 8.4

Variation (%) (50.7) (13.9)

3.2 7.2

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Sadbhav Engineering | 3QFY2013 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 the prevailing high interest rate scenario (which has been a key concern impacting 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. With the money raised, SEL is fully tied up for the projects in hand. This money raising was a timely move 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 | 3QFY2013 Result Update

Exhibit 12: Recommendation summary

Company ABL CCCL IRB Infra ITNL IVRCL JP Assoc. L&T NCC Punj Lloyd Sadbhav Simplex In. CMP 222 13 118 200 31 75 43 48 114 167 TP Rating FY12 268 164 225 35 97 Buy Buy Accu. Accu. Buy Buy 1,500 2,048 3,133 5,606 6,178 - Neutral Top line (` cr) FY13E 1,866 2,262 3,843 6,564 3,773 FY14E CAGR (%) 2,131 2,522 4,212 7,054 6,706 19.2 11.0 15.9 12.2 4.2 12.9 14.3 11.9 11.5 (0.6) 9.0 22.6 (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 (%) 24.3 1.5 16.9 26.3 (3.9) 3.2 63.2 3.1 (0.4) 3.2 14.1 27.0 2.7 17.8 29.0 2.9 4.3 75.1 4.1 3.0 7.2 24.6 9.3 9.3 6.5 121.0 (5.2) 8.1 71.0 3.5 (12.1) 16.6 FY12 9.8 7.9 7.8 53.1 15.6 22.8 30.5 12.1 9.3 P/E 9.1 8.7 7.0 7.6 23.5 23.2 13.9 35.4 11.9 8.2 4.9 6.6 6.9 10.9 17.3 19.5 10.4 16.4 15.7 6.8 OB/ 2.9 2.2 2.8 1.5 4.9 2.7 3.3 2.0 3.3 2.5 FY13E FY14E Sales(x)

12,853 14,243 16,382 53,171 60,666 69,525 5,250 2,676 6,010 5,863 1,642 6,026 6,576 2,642 7,135

1,465 1,788

44 Neutral 157 197 Buy Buy

- Neutral 10,557 11,892 13,116

17.5 (113.7)

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. 86 16 52 74 14 25 1,351 25 64 58 197 Core Const. % to TP 32 100 32 33 40 26 76 57 100 37 100 ` 26 Real Estate % to TP 27 ` 182 113 121 7 99 Road BOT % to TP 68 69 54 16 63 Invst. In Subsidiaries ` 4 21 437 % to TP 3 60 24 ` 30 46 12 Others % to TP 13 47 27 Total ` 268 16 164 225 35 97 1,788 44 64 157 197

Source: Company, Angel Research

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Sadbhav Engineering | 3QFY2013 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 1,642 1,642 (38.6) 1,483 207 1,190 85 159 (45.1) 9.7 35 124 (52.9) 7.5 72 20 28.0 71 (65.7) (60.9) 132 42.9 32.4 89 89 48 (65.7) 2.9 5.9 3.2 (65.7) 2,642 2,642 60.9 2,375 333 1,897 145 267 67.5 10.1 45 221 78.8 8.4 77 17 10.6 161 125.3 161 52.2 32.4 109 109 109 125.5 4.1 7.2 7.2 125.5

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Sadbhav Engineering | 3QFY2013 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 1,190 59 525 68 525 11 686 504 1,329 728 236 491 526 1,466 85 793 42 528 18 964 502 1,519 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 15 831 846 459 23 1,329 15 930 945 551 23 1,519 FY2009 FY2010 FY2011 FY2012 FY2013E FY2014E

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Sadbhav Engineering | 3QFY2013 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 56 132 35 123 (20) (43) 228 (124) (116) 20 (221) 10 (11) 5 5 12 56 68 161 45 (25) (17) (52) 112 (160) (77) 17 (220) 92 (11) 81 (27) 68 42

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Sadbhav Engineering | 3QFY2013 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 0.5 2.5 1.7 0.5 1.9 2.9 4.3 19 73 89 76 4.2 12 104 128 103 6.3 10 93 125 69 6.6 11 101 118 65 3.2 16 146 150 110 4.1 10 91 98 62 20.6 21.0 23.9 16.4 17.1 14.7 22.5 24.2 23.5 23.1 24.6 20.3 9.7 10.2 6.0 15.5 16.2 12.1 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 7.5 0.7 1.3 6.9 10.8 0.5 4.9 8.4 0.7 1.9 10.9 10.4 0.5 11.2 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 5.9 3.2 5.6 0.5 56.3 7.2 7.2 10.3 0.5 62.8 22.6 18.7 5.0 0.4 1.8 15.9 3.4 31.7 22.1 4.4 0.4 1.7 15.2 2.5 14.3 11.7 2.7 0.5 0.9 8.5 1.9 12.1 10.2 2.2 0.4 0.8 7.2 1.7 35.4 20.4 2.0 0.4 1.3 13.2 1.6 15.7 11.1 1.8 0.4 0.8 8.3 1.5 FY2009 FY2010 FY2011 FY2012 FY2013E FY2014E

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Sadbhav Engineering | 3QFY2013 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%)

February 19, 2013

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