SADBHAV - Sadbhav Engg.

📊 NSE: SADBHAV 🏢 Construction 📅 Last Updated: 12/14/2025 12:35

💰 Financial Performance

Revenue Growth by Segment

Standalone revenue from operations for H1 FY26 was INR 74.50 Cr, representing a 48.31% decline from INR 144.14 Cr in H1 FY25. Revenue from construction contracts specifically contributed INR 74.12 Cr for the half year ended September 30, 2025, compared to INR 88.75 Cr in the previous year's corresponding period, a 16.48% decrease.

Geographic Revenue Split

Not disclosed in available documents; however, operations are primarily focused on Indian infrastructure projects in roads, irrigation, and mining.

Profitability Margins

Consolidated Net Profit Margin worsened significantly to -59.98% in FY25 from -24.56% in FY24. Standalone Net Loss before tax for H1 FY26 was INR 17.03 Cr, an improvement from the INR 27.93 Cr loss in H1 FY25.

EBITDA Margin

Consolidated Operating Profit before working capital changes for H1 FY26 was INR 354.64 Cr, up 55.01% from INR 228.79 Cr in H1 FY25, primarily driven by adjustments in interest expenses and depreciation despite high net losses.

Capital Expenditure

Not disclosed in available documents; the company is currently focused on asset monetization and deleveraging rather than new capital expenditure.

Credit Rating & Borrowing

Consolidated interest expenses rose 10.44% to INR 234.11 Cr in H1 FY26 from INR 211.97 Cr in H1 FY25. Lenders of subsidiaries RPTPL and RHTPL have classified secured borrowings as non-performing assets (NPAs). Standalone interest expenses were INR 63.84 Cr for H1 FY26.

⚙️ Operational Drivers

Raw Materials

Construction materials (steel, cement, bitumen) and fuel for mining/irrigation projects. Standalone cost of materials consumed was INR 0.42 Cr (0.56% of revenue) and construction expenses were INR 29.22 Cr (39.22% of revenue) for H1 FY26.

Import Sources

Not disclosed in available documents; typically sourced from domestic suppliers in India for infrastructure projects.

Key Suppliers

Not disclosed in available documents; however, the company notes that several vendors have initiated legal proceedings for claims.

Capacity Expansion

Not disclosed in available documents; the company is focused on resuming operations and completing existing construction contracts in roads, irrigation, and mining.

Raw Material Costs

Standalone construction expenses decreased by 80.94% to INR 29.22 Cr in H1 FY26 from INR 153.25 Cr in H1 FY25, reflecting a significant scale-down in project activity.

Manufacturing Efficiency

Not applicable as a construction firm; however, the company emphasizes upgrading employee skills to maintain competitive positioning.

📈 Strategic Growth

Expected Growth Rate

Not disclosed

Growth Strategy

Growth is targeted through asset monetization, proposed fund infusion by promoters, and deleveraging the balance sheet to remove all debt except working capital. The company aims to capitalize on growth potential in the infrastructure sector once operations resume fully.

Products & Services

Construction and maintenance of roads and highways, irrigation project development, and mining services.

Brand Portfolio

Sadbhav Engineering Limited, Sadbhav Infrastructure Project Limited (SIPL).

New Products/Services

Not disclosed in available documents; focus remains on core infrastructure segments.

Strategic Alliances

Strategic focus on Special Purpose Vehicles (SPVs) for HAM (Hybrid Annuity Model) assets and subsidiaries like Sadbhav Infrastructure Project Limited (SIPL).

🌍 External Factors

Industry Trends

The infrastructure sector shows growth potential, but the company is currently navigating financial distress, with auditors highlighting material uncertainty regarding its ability to continue as a going concern.

Competitive Landscape

Operates in a highly competitive infrastructure bidding environment against other major Indian EPC and BOT players.

Competitive Moat

Moat is based on technical expertise in large-scale road and irrigation projects; however, this is currently weakened by a negative consolidated net worth of INR 241.18 Cr and legal disputes with vendors.

Macro Economic Sensitivity

Highly sensitive to interest rates and inflation; interest expenses represent a massive portion of consolidated costs (INR 234.11 Cr in H1 FY26).

Consumer Behavior

Not applicable as a B2G/B2B infrastructure company.

Geopolitical Risks

Vulnerable to supply chain disruptions and labor availability issues caused by geopolitical shocks.

⚖️ Regulatory & Governance

Industry Regulations

Compliance with Indian Accounting Standards (IND AS) and Companies Act 2013; operations are subject to environmental clearances and land acquisition laws.

Taxation Policy Impact

Not disclosed in available documents; however, the company is involved in various legal disputes regarding tax matters.

Legal Contingencies

Contract assets of INR 350.19 Cr are outstanding for closed/suspended projects and are under negotiation or legal dispute. Multiple vendors have initiated legal proceedings across various forums for additional claims. The company has an exposure of INR 798.22 Cr in SIPL, which has a negative net worth.

⚠️ Risk Analysis

Key Uncertainties

Material uncertainty exists regarding the company's ability to continue as a going concern due to a negative consolidated net worth of INR 241.18 Cr and recurring losses. Recoverability of INR 350.19 Cr in contract assets is a major audit qualification.