Sadbhav’s Q4 FY18 revenue came 96% higher y-o-y, aided by revenue at projects being constructed.
From gradually rising traffic at operational assets and as refinancing efforts yield results, Sadbhav Infra’s cash flows continue to improve but have not yet reached scale to trigger de-leveraging in the standalone entity. Recent success with five new hybrid annuities mean asset creation gains further pace, thus more funding needs (consequently no de-leveraging in short to medium-term). Excepting Waranga-Mahagaon (appointed date delayed), the hybrid annuity portfolio is moving largely as anticipated. The CMP implies limited potential, hence, we retain our hold rating. Any asset monetisation or claims receipt are risks to our cash-flow estimates and call.
Higher toll-fee income and O&M income from hybrid annuities meant cash PAT improved to Rs 955m, from Rs 431m a year ago and Rs 871m the previous quarter. FY18 cash PAT of Rs 3.0bn is a hint of the shape of things to come. We see it improving further. Debt for the operational assets fell by Rs 0.4bn q-o-q but increased Rs 0.7bn for the standalone operations. Consequently, ex-hybrid-annuity debt, at Rs 83bn, marginally inched up. This is despite positive cash PAT.
Q4 gross toll collection (Rs 2.6bn) grew 11% over the ordinary Q4 FY17 (low base owing to demon-impact). To a large extent, the two Haryana projects drove the growth, the two Rajasthan projects contained it. We revise our estimates to account for the O&M income that company gets access to through success with five hybrid annuity projects and the delayed appointed date for Waranga-Mahagaon. We raise FY19 Ebitda to 8% and bring losses down. Our sum-of-parts- based target at Rs 148 is largely unchanged.
Sadbhav’s Q4 FY18 revenue came 96% higher y-o-y, aided by revenue at projects being constructed. Adjusted for this, revenue at ~Rs 3.7bn is up ~16% y-o-y, largely driven by 11% growth in gross toll collection and higher construction income.