Sadbhav Engineering (SEL) expects to execute projects at a faster pace in the coming quarters after a less-than-expected 8.4% growth in revenue in the first quarter this fiscal.
Sadbhav Engineering (SEL) expects to execute projects at a faster pace in the coming quarters after a less-than-expected 8.4% growth in revenue in the first quarter this fiscal. Analysts had expected a revenue growth of about 12-15%.
Nitin Patel, executive director, SEL, told FE that there were some issues related to the right of way (RoW) for two of its projects but those have since been resolved.
“Sometimes, there are minor blips, but going ahead, we do not anticipate problems. In general, the land acquisition process is much better than a couple of years ago. Moreover, we will be starting work on projects which we won under the hybrid annuity model (HAM), beginning September and into the fourth quarter,” he said.
In a conference call with analysts earlier this month, the company’s management said it expects to win orders worth Rs 8,000 crore this year. In the first quarter, it won orders worth Rs 1,310 crore, including a road project under HAM worth Rs 1,000 crore from the Karnataka government.
However, according to analysts, land acquisition may still remain a challenge. Analysts at Edelweiss believe Sadbhav’s focus on public, private, partnership (PPP) projects exposes it to to risks associated with gaining RoW on stretches of land stretches, execution and unforeseeable circumstances.
Bidding activity in the roads sector was subdued in the first quarter which is a seasonally slow one, immediately following the frenetic pace of the previous months when NHAI steps up the process of bidding out and awarding projects in order to meet its full year targets.
For the current quarter, NHAI is targeting to bid out 29 projects spanning 1,075 km, under the engineering, procurement and construction (EPC) modem, which is worth `19,800 crore. It is also targeting to bid out 38 HAM projects spanning 1,777 km, costing Rs 36,600 crore.