Any current/future new fundraising through debt or equity?

No current stake sale or equity fundraising planned; the company prefers asset churning and focusing on construction expertise (Page 10). Equity requirement for new HAM projects estimated at Rs.400-500 Crores yearly, funded through internal accruals (Page 10). Consolidated debt as of Dec 31, 2016, is Rs.8,225 Crores; standalone debt is Rs.1,108 Crores (Page 6). Plans to refinance major SPVs like Maharashtra border check post, Shreenathji-Udaipur, Bhilwara-Rajsamand by FY2019, focusing on converting majority of debt into bonds to benefit from better pricing (Pages 15-16). Refinancing expected t

Any current/future capex/capital investment/strategic investment?

Equity commitment of around Rs.460 Crores for five HAM projects, with Rs.79 Crores additional for Mysore-Bellary project (Page 9). Equity spend mainly expected in FY2018 and FY2019, with some upfront equity required in the current quarter (Page 9). Capital expenditure for routine and measure maintenance: estimated Rs.125 Crores for Dhule-Palesner and Hyderabad-Yadgiri MMR in FY2018; Rs.70-75 Crores for Bijapur-Hungund and Rs.290 Crores for Rohtak-Panipat in FY2019 (Pages 6, 9). Ongoing bidding for new HAM and BOT projects aiming to add around 4-5 new assets yearly with total equity requirement

Future growth expectations in sales/revenue/volumes?

Revenue from operational SPVs for FY 2017 is expected to be around Rs. 1125 Crores, based on the current run rate and normal toll rates (Page 6). SIPL standalone revenue is expected to be roughly Rs. 300 Crores in FY 2018, driven mainly by routine maintenance of HAM projects and measure maintenance of operational SPVs (Page 11-12). January 2017 traffic showed growth of 2-3% compared to January 2016, indicating recovery post demonetization, with expectations of continued growth into FY 2018 Q1 (Page 3). Toll rate hike for FY 2018 is finalized at approximately 4.3%, which will positively impa

Future growth expectations in earnings/operating earnings/profits/EPS?

Revenue from operational SPVs for FY2017 expected around Rs.1125 Crores with ~85% cash EBITDA margin, indicating stable operating profitability. FY2018 SIPL standalone revenue anticipated at Rs.300 Crores, driven by routine and measure maintenance activities. Toll rate hike for FY2018 projected around 3-4.3%, supporting revenue growth in toll-based projects. Reduction in average interest cost from 10.3% to around 9%-9.1% for SPVs post refinancing by FY2019 expected to improve margins and profitability. Refinancing of major SPVs planned by FY2019 to capture bond market advantages with l

Current/ Expected Orderbook/ Pending Orders?

As of the call, SIPL has an outstanding order book of Rs. 290 Crores towards routine maintenance of five HAM projects, expected to be executed over 24 to 30 months. The company expects standalone revenue of about Rs. 300 Crores in FY2018, including routine and measure maintenance contracts. SIPL is actively bidding; six HAM projects of lane 453 km worth Rs. 5814 Crores had bids submitted, with three bids still unopened. The HAM bidding pipeline includes 23 projects totaling Rs. 26,275 Crores (1473 km) with financial bids due by March 31, 2017. For BOT toll projects, only 2 bids totaling Rs. 2,

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Sadbhav Infrastructure Projects LtdQ4 FY17Construction

Sadbhav Infrastructure Projects Ltd Q4 FY17 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹2.48P/E: 3.2Market Cap: ₹99 CrSector: Construction

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

Yes

Order

N/A

Capex

Yes

2 of 4 growth signals are positive.

Full analysis

Revenue guidance

Category 3

→Revenue from operational SPVs for FY 2017 is expected to be around Rs. 1125 Crores, based on the current run rate and normal toll rates (Page 6).
→SIPL standalone revenue is expected to be roughly Rs. 300 Crores in FY 2018, driven mainly by routine maintenance of HAM projects and measure maintenance of operational SPVs (Page 11-12).
→January 2017 traffic showed growth of 2-3% compared to January 2016, indicating recovery post demonetization, with expectations of continued growth into FY 2018 Q1 (Page 3).
→Toll rate hike for FY 2018 is finalized at approximately 4.3%, which will positively impact revenue growth (Page 11).
→Bidding pipeline for HAM projects is significant, with expectations to win 4-5 projects per year, supporting future sales and volumes growth (Page 4, 12).
→Cash EBITDA margin from operational SPVs is expected to remain around 85% going forward (Page 6).

Margin guidance

Category 3

→Revenue from operational SPVs for FY2017 expected around Rs.1125 Crores with ~85% cash EBITDA margin, indicating stable operating profitability.
→FY2018 SIPL standalone revenue anticipated at Rs.300 Crores, driven by routine and measure maintenance activities.
→Toll rate hike for FY2018 projected around 3-4.3%, supporting revenue growth in toll-based projects.
→Reduction in average interest cost from 10.3% to around 9%-9.1% for SPVs post refinancing by FY2019 expected to improve margins and profitability.
→Refinancing of major SPVs planned by FY2019 to capture bond market advantages with lower interest rates.
→Plans to add 4-5 new projects yearly with equity around Rs.400-500 Crores, fueling growth and asset portfolio expansion.
→Expected normalization and growth recovery post demonetization impact, with traffic and toll collection improving from FY2018 Q1 onward.
→Debt service coverage ratio maintained at comfortable 1.28 supporting sustainable profitability and growth.

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Fundraise plans

Yes

→No current stake sale or equity fundraising planned; the company prefers asset churning and focusing on construction expertise (Page 10).
→Equity requirement for new HAM projects estimated at Rs.400-500 Crores yearly, funded through internal accruals (Page 10).
→Consolidated debt as of Dec 31, 2016, is Rs.8,225 Crores; standalone debt is Rs.1,108 Crores (Page 6).
→Plans to refinance major SPVs like Maharashtra border check post, Shreenathji-Udaipur, Bhilwara-Rajsamand by FY2019, focusing on converting majority of debt into bonds to benefit from better pricing (Pages 15-16).
→Refinancing expected to complete by Q4 FY2017 or early FY2018 with bond issuances (Page 14-16).
→Monetization of assets under discussion with potential investors, but no agreements or final decisions yet (Page 9-10).

Order book

→As of the call, SIPL has an outstanding order book of Rs. 290 Crores towards routine maintenance of five HAM projects, expected to be executed over 24 to 30 months.
→The company expects standalone revenue of about Rs. 300 Crores in FY2018, including routine and measure maintenance contracts.
→SIPL is actively bidding; six HAM projects of lane 453 km worth Rs. 5814 Crores had bids submitted, with three bids still unopened.
→The HAM bidding pipeline includes 23 projects totaling Rs. 26,275 Crores (1473 km) with financial bids due by March 31, 2017.
→For BOT toll projects, only 2 bids totaling Rs. 2,821 Crores (133 km) are upcoming before March 31, 2017.
→SIPL plans to continue bidding for both HAM and BOT toll projects, focusing on capturing 4-5 projects per year.

Capex plans

Yes

→Equity commitment of around Rs.460 Crores for five HAM projects, with Rs.79 Crores additional for Mysore-Bellary project (Page 9).
→Equity spend mainly expected in FY2018 and FY2019, with some upfront equity required in the current quarter (Page 9).
→Capital expenditure for routine and measure maintenance: estimated Rs.125 Crores for Dhule-Palesner and Hyderabad-Yadgiri MMR in FY2018; Rs.70-75 Crores for Bijapur-Hungund and Rs.290 Crores for Rohtak-Panipat in FY2019 (Pages 6, 9).
→Ongoing bidding for new HAM and BOT projects aiming to add around 4-5 new assets yearly with total equity requirement of Rs.400-500 Crores (Page 10).
→The company's strategy focuses on developing and constructing roads, with plans for asset churning post maturity (Page 10).
→No current signed agreements on asset monetization, but discussions with potential investors are underway (Page 10).

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