Sadbhav Engineering hits over 5-year low; plunges 58% in 6-months

Shares of Sadbhav Engineering slipped 7 per cent to hit an over five-year low of Rs 103 on the BSE on Tuesday on back of heavy volumes. The stock of the construction and engineering company was trading at its lowest level since April 2014.

At 01:34 pm, around 1.05 million shares, representing 0.61 per cent of total equity, of Sadbhav Engineering changed hands via block deals on the BSE, the exchange data shows. The name of buyers and sellers, however, were not ascertained immediately.

According to the company's shareholding pattern, as of September 2019, promoters have a pledge on 41 per cent of shares.

In the past six months, the market price of the company has tanked 58 per cent, as compared to a 5 per cent gain in the S&P BSE Sensex.

For the July-September quarter (Q2FY20), Sadbhav Engineering reported a subdued set of numbers with revenue declining 18 per cent year on year (YoY) to Rs 565 crore. The revenue growth was largely impacted by delays in receipt of appointed date and heavy rainfall impacting execution in certain projects.

With the heavy monsoon-impacting the performance in Q2 and a consequent weak H1, the company is expected to post disappointing revenue for a fifth straight year. The company’s order book position declined to Rs 9,500 crore at the end of September 2019 quarter, as against Rs 10,810 crore at the end of June 2019.

Last month, ratings agency Crisil had downgraded long-term facilities of two of Sadbhav Group’s highway projects – Sadbhav Bhavnagar Highway and Sadbhav Rudrapur Highway — due to delays in receiving provisional commercial operation date, a key benchmark date against which rating agencies monitor the risk profile of highway projects.

“The downgrade in rating is on account of the ongoing delays in the under construction project portfolio of the sponsor - Sadbhav Infrastructure Project and ultimate sponsor - Sadbhav Engineering . This has resulted in higher than expected support requirement from the sponsors, thus leading to deterioration in its credit profile. Sadbhav Bhavnagar Highway is expected to be supported by the sponsors given ongoing delay in the projects,” Crisil said in a rating rational.

At 03:13 pm, the stock was trading 4 per cent lower at Rs 107 on the BSE. A combined 2.5 million equity shares changed hands on the counter on the NSE and BSE till the time of writing of this report.