Sadbhav Engineering (SEL) posted a contraction of 73% y-o-y in topline and Rs 266 million loss in Q1FY21 as Covid-19 derailed execution. Operations are now at ~80% of pre-Covid level and expected to normalise by Q3FY21. The lockdown and the pandemic dragged toll collection significantly during the quarter, but it has now recovered to ~95% of pre-Covid level. Incremental order wins, ramp-up in execution and reduction in leverage are key to stock performance, in our view. We introduce FY22E numbers (as the stock comes out of restriction) and maintain ‘buy’ with SOTP-based TP of Rs 67.
Topline plunged 73% y-o-y with the health crisis playing spoilsport. With Ebitda margin declining ~400 bps y-o-y to 8.5%, the company reported a loss of Rs 266 million during the quarter. Labour/raw material availability, which was ~20-40% during Q1FY21, has now reached 80% level.
