Asset sale puts Sadbhav back on the road; still an uphill journey for investors

The big news of Sadbhav Infrastructure Project Ltd’s asset divestiture has not brought investors jumping to their feet in cheer. The stock has fallen 6% in the past two trading sessions, and that of its parent Sadbhav Engineering Ltd has fallen 4%. Perhaps, investors are awaiting for the proceeds to actually to flow in.

Also, government decisions such as allowing alternative routes that jeopardize toll-collection forecasts and lack of a back-up mechanism to service loans in case of a liquidity crunch would be an overhang on the stocks.

“We would wait for execution to pick up meaningfully and working capital cycle to improve before we turn constructive on the rating of the company,” said Motilal Oswal Financial Services Ltd in a note to clients.