Engineering and Construction

November 23, 2011

Sadbhav Engineering
Bloomberg: SADE IN EQUITY Reuters: SADE.NS

NOT RATED

Accounting: GREEN Predictability: GREEN Earnings Momentum: GREEN COMPANY VISIT NOTE
Nitin Bhasin
Tel: +91 22 3043 3241 nitinbhasin@ambitcapital.com

A solid, sensible construction play

Sadbhavs stock price has risen 26% over the last two years whilst all other infrastructure/construction companys stock prices have fallen 25-80%. This superlative performance can be attributed to Sadbhavs: (a) superior accounting quality; (b) continuing strength in cost competitiveness; and (c) well funded infra BOT assets. Industry leading 44% CAGR in revenues and steady net margins over FY09-11 signify the importance of well-managed balance sheet for delivering profitable growth. The stock (including embedded value of `81/share) presently trades at 11.5x FY13E consensus EPS (an 36% premium to peers). Competitive Position: STRONG Change to this position: POSITIVE Accounting and corporate governance checks signify credibility: Superior cash flow management (positive CFO and FCF in FY09 and FY10) and relatively low level of unclassified loans & advances (21% of FY11 networth) underscore Sadbhavs superior accounting quality versus its peers. However, on corporate governance checks, Sadbhav is an average company in the sector because of: (a) lower managerial remuneration as a proportion of PBT (3.7% in FY11) and (b) mainly equity route to invest in BOT subsidiaries. Relative to other road developers (IRB, ITNL and Ashoka), the company reports lower but more comprehensible EBITDA margins of 11%, which have remained stable (as compared to ~20% margin reported by IRB in FY11). Gaining competitiveness in a crumbling world: In our competitive mapping of the Indian EPC sector, Sadbhav not only stands as the strongest player, it has continuously gained competitiveness over the last 3 years. Despite a relatively lower revenue base and lower networth (which keep its prequalification competitiveness moderate), Sadbhavs markedly superior cost structure gives it industry leading cost competitiveness. Steady gross block turnover, lower fixed and financial costs underscore this cost competitiveness. Relatively low debt: equity (0.6X vs 1-1.5X for most peers) and superior cost competitiveness should enable Sadbhav to bid competitively against its peers who are capital starved and reeling under rising financial cost pressures. More gains from its BOT portfolio: Whilst Sadbhav also has a higher proportion of its networth (50%) invested in its BOT subsidiaries, what differentiates Sadbhav from its peers (who have struggled with their BOT portfolios) is how Sadbhav has: (a) switched between the cash (roads and others) and BOT contracts as per the market conditions; (b) demonstrated timely (in fact, ahead of schedule) execution of its BOTs through incentives for sub-contractors; and (c) used external equity funding for completing projects. We believe timely and controlled cost construction of BOT roads can make up for the underperformance of traffic flows. Most of Sadbhavs peers have witness 25-50% time and cost overruns and lower traffic. In contrast, Sadbhav is ahead of schedule in most of its BOTs under construction and witnessing strong traffic in operational assets. Premium valuations for superior quality and performance: The stock (including embedded value) is presently trading at 11.5X and 1.9X FY13 one year-forward earnings and book, respectively. The relative valuations are a 36% premium to Sadbhavs construction peers. Excluding consensus current embedded value of `81/share, the stock is trading at 3.7X and 0.6X one yearforward earnings and book, respectively.. This premium is clearly warranted given Sadbhavs superior cash flow generation profile, no immediate equity dilution risks and a strong balance sheet for capturing growth when the Indian infrastructure & construction sector recovers.

Chhavi Agarwal
Tel: +9122 3043 3203 chhaviagarwal@ambitcapital.com

Stock Information
CMP: Mkt cap: 52-wk H/L: 3M ADV: Beta: BSE Sensex: Nifty: EPS (FY13E) consensus: `119 `18bn/US$344mn `158/91 `12mn/US$0.2mn 1.5x 16,065 4,812 `12.4

Stock Performance (%)

1M Absolute Rel. to Sensex 3M 12M 1.6 YTD 1.2 22.9 -6.9 -12.4 -16.4 -2.6 -11.9

Performance (%)
25,000 20,000 1 5,000 1 0,000 No v-1 0 Sensex M ar-1 1 Jul-1 1 1 80 1 30 80 30 No v-1 1 Sadbhav Eng (Rs)

Sadbhav has outperformed its peers over the last 3 years

500 400 300 200 100 0 Nov- Apr- Sep- Feb08 09 09 10 Sadbhav Jul10 Dec- May- Oct10 11 11 NCC L&T

IVRCL

Source: Bloomberg, Ambit Capital research; Note: Prices are indexed to 100

Ambit Capital and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, investors should be aware that Ambit Capital may have a conflict of interest that could affect the objectivity of this report. Investors should not consider this report as the only factor in making their investment decision.

Please refer to the Disclaimers at the end of this Report.

Sadbhav Engineering

Company Financial Snapshot

Company Background Event Calendar
CY 1988 1989 2001 2006 2006 2007 2008 2010 Event Incorporated by acquiring M/s Bhavna Construction Company Bagged first project from Sardar Sarovar Narmada Nigam Ltd Awarded first direct EPC project from NHAI Awarded first BOT project (Ahmedabad Ring Road Project) Raised an IPO of `537mn QIP placement of `920mn Commercial operations started for Ahmedabad Ring Road Project Raised `1.2bn from rights issues and `4bn from the sale of 22.22% stake in SIPL.

Incorporated in 1988, Sadbhav Engineering is an Engineering, Procurement and Construction (EPC) company catering to the roads/highways, mining and irrigation sectors. The roads segment dominates Sadbhavs revenues (82% of revenues in FY11) and order book (74% of order book in FY11). Apart from the core construction business, the company has an infrastructure asset portfolio of four operational projects and five road projects under construction (roads). The firms promoters (Vishnubhai Patel family), hold 48% stake in Sadbhav Engineering which in turn holds a 78% stake in its BOT asset portfolio subsidiary, Sadbhav Infrastructure Pvt Ltd (SIPL).
Profit and Loss (consolidated)
Y/E March (` mn) Net Sales Optg Exp EBITDA Depreciation Interest Expenses PBT ex EO Tax Consolidated Adj. PAT Profit and Loss Ratios EBITDA Margin (%) Adj Net Margin (%) 14.1% 3.9% 17.5% 2.6% 15.5% 3.9% FY09 10,974 9,549 1,544 378 673 574 197 433 FY10 13,340 11,268 2,332 565 1,412 726 459 353 FY11 23,294 19,952 3,608 789 1,574 1,409 638 919

Profit and Loss (stand-alone)

Y/E March (` mn) Net Sales Optg Exp EBITDA Depreciation Interest Expenses PBT ex EO Tax Adj. PAT Profit and Loss Ratios EBITDA Margin (%) Adj Net Margin (%) 10.6% 6.0% 11.3% 4.2% 10.8% 5.5% FY09 10,609 9,487 1,123 157 269 829 196 637 FY10 12,565 11,143 1,422 233 380 980 441 526 FY11 22,092 19,710 2,381 269 550 1,757 562 1,205

Balance Sheet (consolidated)

Y/E March (` mn) Total Assets Fixed Assets Current Assets Investments Total Liabilities Total networth Total Debt Current Liabilities /Provisions Balance Sheet ratios ROE (%) RoCE (%) Net Debt/Equity (x) Total Debt/Equity (x)
Source: Ambit Capital research, Company.

Balance Sheet (stand-alone)

FY09 10,118 6,174 1,246 4,199 9,383 2,867 13.0% 7.8% 2.2 2.2 FY10 13,001 9,658 1,441 4,129 14,551 4,646 10.0% 4.7% 3.4 3.5 FY11 24,385 12,304 3,264 10,740 20,028 6,014 15.0% 7.2% 1.7 1.9 Y/E March (` mn) Total Assets Fixed Assets Current Assets Investments Total Liabilities Total networth Total Debt Current Liabilities /Provisions Balance Sheet ratios ROE (%) RoCE (%) Net Debt/Equity (x) Total Debt/Equity (x) 20.2% 14.9% 0.6 0.6 14.3% 9.5% 1.0 1.1 23.7% 15.6% 0.5 0.6 FY09 5,656 1,545 5,522 1,246 5,656 3,435 2,111 2,666 FY10 8,295 2,101 10,659 1,441 8,295 3,915 4,239 5,907 FY11 10,379 2,298 14,341 3,264 10,379 6,257 3,961 9,524 13,692 18,821 30,929

13,692 18,821 30,929

Ambit Capital Pvt Ltd

Sadbhav Engineering Exhibit 1: Growth in stand-alone revenues (LHS) is mainly driven by captive orders; EBITDA and PAT margins have remained stable
Rs bn 25 20 15 10 5 0 FY08
Mining EBITDA margin (RHS)

Exhibit 2: High revenue growth from captive orders helped improve working capital and gross block turnover significantly in FY11
7

13% 11% 9% 7% 5% 3% FY09 FY10 FY11

Road (External Clients) Irrigation PAT margin (RHS) Road ( Captive BOTs)

6 5 4 3 2 FY08 FY09 FY10 FY11 Working capital turnover (x) Gross Block turnover (x)
Source: Ambit Capital research, Company

Source: Ambit Capital research, Company Note (a) We have taken standalone revenues on the LHS.

Exhibit 3: Completion of BOTs and external equity infusion significantly lowered debt:equity in FY11

Exhibit 4: Stand-alone return ratios are ahead of peers; consolidated ratios will rise gradually as BOT revenues, cash flows and earnings rise, as visible in FY11
25%

FY11 FY10 FY09 FY08 1.0 Stand-alone (x)

Source: Ambit Capital research, Company

20% 15% 10% 5% 0% FY08

2.0 3.0 4.0 5.0

FY09

FY10

FY11 RoE (Cons) RoCE (Cons)

RoE (SA) RoCE (SA)

Consolidated (x)

Source: Ambit Capital research, Company. SA denotes standalone and Cons denotes Consolidated.

Exhibit 5: Investment and loans to BOTs have declined as a proportion of networth in FY11 as incremental investments in BOTs were met through BOT stake sale
Year (` mn) Equity Investment in BOTs (A) FY08 FY09 FY10 FY11 844 1,096 1,441 3,244 Loans to BOTs (B) 202 72 1,423 39 A+B (C ) 1,046 1,168 2,864 3,283 37% 34% 73% 52% 24% 21% 35% 32% C as % of Networth C as % of Capital employed

Exhibit 6: BOT funding mainly from internal cash flows and external equity, rather than heavy debt raisings
6,000 4,500 3,000 1,500 (1,500) FY08 FY09 FY10 FY11
CFO (SA) (Rs mn) Investment in BOTs (Rs mn) Fresh equity raise (Rs mn) FCFF (SA) (Rs mn) Incremental debt (Rs mn)

Source: Ambit Capital research, Company. We have taken standalone data for our analysis

Source: Ambit Capital research, Company. Note: In FY08 Sadbhav raised Rs920mn through QIP. In FY11, Sadbhav raised Rs1.2bn from rights issues and Rs4bn from the sale of a 22.22% stake in SIPL.

Ambit Capital Pvt Ltd

Sadbhav Engineering

Order book driven by captive BOTs

Exhibit 7: For the last 18 months, BOT orders are not the ones driving order inflows
Rs bn 45 36 27 18 9 0 FY08 BOT roads FY09 FY10 FY11 Mining 1HFY12 Irrigation

Exhibit 8: Faster execution of well-funded BOT assets is bringing the Book to bill (BTB) ratio lower since FY10
Rs bn 80 60 40 20 0 FY08
Mining BTB - BOT roads (x) (RHS)

8 6 4 2 0 FY09 FY10 FY11 1HFY12

BOT roads Road others Irrigation BTB - Overall (x) (RHS)

Road others

Source: Ambit Capital research, Company

Source: Ambit Capital research, Company. Note: (a) We have taken stand-alone data for analysis; (b) For calculating book-to-bill for 1HFY12, segmental revenues and order flow for 2HFY11 is divided as per FY11

BOT Portfolio- benefits accruing

Unlike its peers, Sadbhav Engineering (SEL) has been able to complete most of its projects in time or ahead of schedule, thus controlling the costs of construction for its BOT assets. Presently, it has five assets under construction. Of these, nearly three roads are ahead of schedule which could materially improve the profitability of the group, as Sadbhav Infrastructure Pvt Ltd (SIPL) (the asset holding subsidiary of SEL) shares the benefits of early tolling with the parent SEL. The assets under construction require another `4.4bn of equity over next 18 months (of which `2.5bn has to be contributed by Sadbhav). SEL intends to infuse equity in SIPL before March 2012 (thereby raising its stake to ~82%) at a valuation similar to the valuation at which a private equity investor took a 22.22% stake in Sept 10.
Exhibit 9: Sadbhav Infrastructure Pvt Ltd (SIPL) road BOT asset details
Length (km) Project Cost ` mn Operational Assets Ahmedabad Ring Road Aurangabad - Jalna Mumbai - Nasik Nagpur - Seoni Total Under Construction Assets Dhule - Palasner Maharasthra border check post Rohtak - Panipat Bijapur - Hungund Hyderabad - Yadgiri Total 97 NA 80 35 100 Toll Toll Toll Toll Toll 14,200 14,264 12,134 12,571 4,802 57,971 27% 90% 100% 77% 60% Oct-13 Mar-13 May-12 Dec-12 Nov-11 Mar-12 Jun-12 Dec-11 3,550 1,560 2,427 1,370 1,000 9,907 959 1,404 2,427 1,055 600 6,444 753 1,277 607 1,055 314 4,005 206 127 1,820 286 2,439 NA NA NA NA NA NA NA NA NA NA 76 69 100 Toll Toll Toll 5,008 2,770 7,901 4,897 20,576 80% 100% 20% 50% Jan-07 Aug-09 50% in Apr-10 Jun-10 521 829 1,206 1,098 3,654 417 829 241 549 2,036 417 829 241 316 1,803 NA -14% NA -23% NA NA -21% -21% NA NA Actual Scheduled SIPL /expected completion Stake completion date date Total SIPL equity Equity requirements share ` mn ` mn Equity Equity to already be invested invested RoE by SIPL by SIPL FY11 upto ` mn FY13E RoE FY10

Type

56 Annuity

NA -22%

Source: Ambit Capital research, Company

Ambit Capital Pvt Ltd

Sadbhav Engineering

Exhibit 10: BOT cash flows increased significantly in FY11 as revenues rose marginally and interest costs remained stagnant
Rs mn 3,000 2,000 1,000 (1,000) FY08
Revenues PAT

Exhibit 11: Consolidated RoEs may remain low but will increase gradually as cash flows rise from present operational assets and assets coming up for operations
25% 20% 15% 10% 5% 0%

FY09
CFO

FY10

FY11

FY08 RoE (SA)

FY09

FY10

FY11 RoE (Cons) RoCE (Cons)

Interest payment

RoCE (SA)
Source: Ambit Capital research, Company

Source: Ambit Capital research, Company (a) The above analysis is calculated as Consolidated less stand-alone

Exhibit 12: Explanation for our forensic accounting scores

Segment Accounting Score GREEN Comments In our forensic accounting analysis of 20 construction companies, Sadbhav is in the topquartile both on the aggressive accounting parameter and the cash manipulation parameter.

Predictability

GREEN

Sadbhav has always made timely disclosures regarding its future strategy, expected business momentum and expected earnings performance in their conference calls Over the last six months, FY2012 and FY2013 consensus EPS have been revised upward by 15%-20%.

Earnings momentum

GREEN

Source: Ambit Capital research, Sadbhav, Bloomberg

Ambit Capital Pvt Ltd

Sadbhav Engineering

Valuations
Relative valuations historical perspective
Unlike its peers whose valuations have seen historical lows in the last three months, Sadbhav valuations remain sturdy on account of (a) improving financial performance and external equity infusion into BOT assets, and (b) continuing strength of the construction business.
Exhibit 13: Sadbhav is trading at a 20% discount to its 5 year historical 1-year forward PE of 14x
(Rs) 250 200 150 100 50 0 Apr-06 20x 16x 150 12x 8x 100 50 0 Apr-06

Exhibit 14: Sadbhav is trading at a 17% discount of to its 5 year historical 1-year forward PB of 2.5x
(Rs) 250 200 3.0x 2.5x 2.0x 1.5x

Apr-07

Apr-08

Apr-09

Apr-10

Apr-11

Apr-07

Apr-08

Apr-09

Apr-10

Apr-11

Source: Ambit Capital research, Bloomberg, Note (a) We have taken stand-alone consensus EPS for our analysis

Source: Ambit Capital research, Bloomberg Note (a) We have taken stand-alone consensus BVPS for our analysis

Embedded value for Sabhav has witnessed upgrades over the last couple of years; (consensus embedded value estimates: Jun-09:`15/share, Apr-10:`44/share, Nov-10: `67/share and Oct-11:`81/share). The present embedded value implies `15.5bn valuation for SIPL, which is a 14% discount to the valuation (`18bn) ascribed by private equity investors in August 2010 while infusing `4bn for 22.2% stake. Adjusting for the consensus embedded value, Sadbhavs stock is trading at 1-year forward P/E and P/B of 3.5x and 0.6x, respectively, which is a significant discount to its 2 year historical average.
Exhibit 15: Ex-embedded value, Sadbhav is trading at a 1-year forward PE of 3.5x which is a discount of 57% to its average 2 year historical PE of 8.1x
150 125 100 75 50 25 0 Oct-09 Oct-10 Oct-11 Jun-09 Jun-10 Jun-11 Feb-10 Feb-11 11x 9x 7x 5x

Exhibit 16: Ex-embedded value, Sadbhav is trading at a 1-year forward PB of 0.6x which is a discount of 58% to its average 2 year historical PB of 2.3x
150 125 100 75 50 25 0 Oct-09 Oct-10 Feb-10 Feb-11 Oct-11 Jun-09 Jun-10 Jun-11 1.5x 1x 2.5x 2x

Source: Ambit Capital research, Bloomberg, Note: We have taken consensus data for our analysis.

Source: Ambit Capital research, Bloomberg, Note: We have taken consensus data for our analysis.

Ambit Capital Pvt Ltd

Sadbhav Engineering

Relative valuations to its construction peers

On FY13 PE multiple, whilst including the embedded value Sadbhav trades at a premium to peers, excluding the embedded value it trades at a discount to its construction peers. This highlights that market values Sadbhavs BOT assets closer to the valuation ascribed by the PE investors and at a premium to valuation ascribed to peers BOT assets. However, at the same time, the relative discount excluding embedded value signifies that market does not value the core construction business materially different to peers such as IVRCL and NCC. We believe that going forward Sadbhavs valuations (ex-embedded value) can also trade at a premium to others as its relatively low debt: equity and superior cost competitiveness enable it to bid competitively and grow faster as compared to its capital starved peers.
Exhibit 12: Relative valuation on standalone basis including and excluding embedded values
Company/ Metric Market CMP cap (`) L&T Sadbhav Punj Lloyd HCC NCC Simplex IVRCL Gammon Patel CCCL KNR Average 1,227 119 48 21 39 198 33 53 85 18 98 (` bn) 751 18 16 13 10 10 9 7 6 3 3 Embedded Embedded value value (Oct- 11) (`/share) 398 81 0 18 18 0 15 50 79 0 20 (` bn) 244 12 0 11 5 0 4 7 6 0 1 P/E (X) including excluding embedded embedded value value FY12 FY13 FY12 FY13 17.9 12.6 18.9 NA 7.8 7.8 9.1 8.9 6.0 17.6 4.9 8.7 11.2 15.6 11.5 9.7 NA 6.9 6.1 8.9 6.8 6.0 6.8 5.4 7.2 8.4 12.1 4.0 18.9 NA 4.2 7.8 4.9 0.5 0.4 17.6 3.9 4.7 7.4 10.6 3.7 9.7 6.7 3.7 6.1 4.8 0.4 0.4 6.8 4.3 4.0 5.2 P/B (X) including excluding embedded embedded value value FY12 FY13 FY12 FY13 3.1 2.3 0.5 0.2 0.4 0.8 0.4 0.3 0.4 0.5 0.7 9.3 0.9 2.7 1.9 0.5 0.1 0.4 0.7 0.4 0.3 0.4 0.5 0.6 7.3 0.8 2.1 0.7 0.5 0.1 0.2 0.8 0.2 0.1 0.1 0.5 0.5 5.4 0.5 1.8 0.6 0.5 0.1 0.2 0.7 0.2 0.1 0.1 0.5 0.5 4.1 0.5

Average (excluding L&T and Punj)

Source: Company, Ambit Capital research, Industry, Bloomberg, Note: (a) Share prices and market cap data is as on Nov-22, 2011 (b) We have used our stand-alone estimates for NCC, IVRCL, CCCL and KNR and consensus estimates for others. (c) We have taken stand-alone EPS and BVPS consensus data for L&T, Sadbhav, HCC, Gammon and Patel and consolidated consensus data for Punj Lloyd and Simplex.

Relative valuations to its road developer peers

Exhibit 13: Relative Valuation to other road developers
Company Sadbhav IRB Ashoka ITNL Average CMP (`) 119 142 239 178 Mcap (US$ mn) 341 896 239 658 FY11E 11.7 9.7 10.9 7.1 9.8 P/E FY12E 9.6 8.8 8.5 6.4 8.3 FY13E 8.7 8.9 8.0 6.5 8.0 P/B FY11E 1.8 1.6 1.2 1.3 1.5 FY12E 1.8 1.4 1.1 1.1 1.3 RoE FY11 15% 20% 31% 22% RoCE FY11 11% 19% 17% 72%

Source: Ambit Capital research, Company, Bloomberg Note (a) Prices are as on Nov 22, 2011. (b) We have taken consolidated EPS and BVPS consensus data our analysis.

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Sadbhav Engineering

Exhibit 14: Sadbhav now trades at a justified premium to IVRCL and NCC and a much lesser discount to L&T on the 1-yr forward PE multiple
60 50 40 30 20 10 Apr-09 Apr-10 Apr-11 Oct-08 Oct-09 Oct-10 Oct-11

Exhibit 15: On 1-yr forward PB basis, Sadbhav trades in line with IRB , but at a premium to ITNL

3.5 3 2.5 2 1.5 1 0.5 Feb-09 May-09 Feb-10 May-10 Feb-11 May-11 Nov-09 Nov-10 Nov-11
8

Aug-09

Aug-10

IVRCL (x) SADE (x)

NCC (x) L&T (x)

IRB(x)

Sadbhav (x)

ITNL (x)

Source: Ambit Capital research, Bloomberg, Note: We have taken consensus stand-alone data for our analysis.

Source: Ambit Capital research, Bloomberg, Note: We have taken consensus consolidated data for our analysis.

Ambit Capital Pvt Ltd

Aug-11

Sadbhav Engineering

Institutional Equities Team

Saurabh Mukherjea, CFA Research Analysts Aadesh Mehta Anand Mour Ankur Rudra, CFA Ashvin Shetty Bhargav Buddhadev Chandrani De, CFA Chhavi Agarwal Dayanand Mittal Gaurav Mehta Hardik Shah Krishnan ASV Nitin Bhasin Pankaj Agarwal, CFA Parita Ashar Puneet Bambha Rakshit Ranjan, CFA Ritika Mankar Ritu Modi Shariq Merchant Sales Name Deepak Sawhney Dharmen Shah Dipti Mehta Pramod Gubbi, CFA Sarojini Ramachandran Production Sajid Merchant Kausalya Vijapurkar Praveen Mascarenhas Production Editor Database (022) 30433247 (022) 30433284 (022) 30433251 sajidmerchant@ambitcapital.com kausalyavijapurkar@ambitcapital.com praveenmascarenhas@ambitcapital.com Regions India / Asia India / Asia India / Europe India / Asia UK Desk-Phone (022) 30433295 (022) 30433289 (022) 30433053 (022) 30433228 +44 (0) 20 7614 8374 E-mail deepaksawhney@ambitcapital.com dharmenshah@ambitcapital.com diptimehta@ambitcapital.com pramodgubbi@ambitcapital.com sarojini@panmure.com Industry Sectors Banking / NBFCs FMCG Technology / Education Services Automobile Power / Capital Goods Metals & Mining Construction / Infrastructure Oil & Gas Derivatives Research Technology / Education Services Banking Construction / Infrastructure / Cement NBFCs Metals & Mining / Media / Telecom Power / Capital Goods Mid-Cap Economy Cement Consumer Desk-Phone (022) 30433239 (022) 30433169 (022) 30433211 (022) 30433285 (022) 30433252 (022) 30433210 (022) 30433203 (022) 30433202 (022) 30433255 (022) 30433291 (022) 30433205 (022) 30433241 (022) 30433206 (022) 30433223 (022) 30433259 (022) 30433201 (022) 30433175 (022) 30433292 (022) 30433246 E-mail aadeshmehta@ambitcapital.com anandmour@ambitcapital.com ankurrudra@ambitcapital.com ashvinshetty@ambitcapital.com bhargavbuddhadev@ambitcapital.com chandranide@ambitcapital.com chhaviagarwal@ambitcapital.com dayanandmittal@ambitcapital.com gauravmehta@ambitcapital.com hardikshah@ambitcapital.com vkrishnan@ambitcapital.com nitinbhasin@ambitcapital.com pankajagarwal@ambitcapital.com paritaashar@ambitcapital.com puneetbambha@ambitcapital.com rakshitranjan@ambitcapital.com ritikamankar@ambitcapital.com ritumodi@ambitcapital.com shariqmerchant@ambitcapital.com Head of Equities (022) 30433174 saurabhmukherjea@ambitcapital.com

Ambit Capital Pvt Ltd

Sadbhav Engineering

Explanation of Investment Rating

Investment Rating Expected return (over 12-month period from date of initial rating) >5% <5%

Buy Sell

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AMBIT Capital makes best efforts to ensure that conflicts are identified and managed and that clients interests are protected. AMBIT Capital has policies and procedures in place to control the flow and use of non-public, price sensitive information and employees personal account trading. Where appropriate and reasonably achievable, AMBIT Capital segregates the activities of staff working in areas where conflicts of interest may arise. However, clients/potential clients of AMBIT Capital should be aware of these possible conflicts of interests and should make informed decisions in relation to AMBIT Capitals services. 16. AMBIT Capital and/or its affiliates may from time to time have investment banking, investment advisory and other business relationships with companies covered in this Research Report and may receive compensation for the same. Research analysts provide important inputs into AMBIT Capitals investment banking and other business selection processes. 17. AMBIT Capital and/or its affiliates may seek investment banking or other businesses from the companies covered in this Research Report and research analysts involved in preparing this Research Report may participate in the solicitation of such business. 18. In addition to the foregoing, the companies covered in this Research Report may be clients of AMBIT Capital where AMBIT Capital may be required, inter alia, to prepare and publish research reports covering such companies and AMBIT Capital may receive compensation from such companies in relation to such services. However, the views reflected in this Research Report are objective views, independent of AMBIT Capitals relationship with such company. 19. In addition, AMBIT Capital may also act as a market maker or risk arbitrator or liquidity provider or may have assumed an underwriting commitment in the securities of companies covered in this Research Report (or in related investments) and may also be represented in the supervisory board or on any other committee of those companies.

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