ICICIdirect has maintained 'Buy' on Sadbhav Engineering with target price of Rs 240 as against current market price (CMP) of Rs 211 with upside potential of 14% in its report.

Commenting on the investment rationale, the stock broker said, ''Sadbhav's topline at Rs 7.99 billion (13.8% YoY) was lower than our estimate of Rs 9.1 billion due to slower than anticipated execution. Adjusted PAT at Rs 341 million was largely in line led by superior margins (11% vs. our estimate: 10.2%), which offset the topline miss

The order book stands at Rs 89.41 billion (gross inflow of Rs 23.17 billion in FY14), implying a book to bill ratio of 3.8x on a TTM basis, providing strong visibility for growth over the next few years. On the back of strong visibility, SEL has guided for 25% revenue growth guidance in FY15E

On a consolidated basis, revenues grew 26.5% YoY to Rs 27.33 billion while net profit grew 5.9x to Rs 444 million. In FY14, SIPL changed its depreciation methodology from SLM to revenue based. As a result, consolidated depreciation expenses declined from Rs 1.71 billion in FY13 to Rs 1.31 billion in FY14

SEL remains our top pick in the sector on the back of a strong order book, well funded equity for BOT projects portfolio, strong execution track record and better earning CAGR. We maintain our Buy recommendation with an SOTP based target price of Rs 240. We have valued SEL's 80% stake in SIPL (BOT subsidiary) at Rs 161/share and construction business at Rs 79/share (at 6x FY16 EV/EBITDA.''

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