SADBHAV ENGINEERING: A HIGH-RISK INFRA TURNAROUND BET 🏗️

SADBHAV India's infrastructure growth creates opportunities for road and highway developers. But in distressed businesses, the biggest opportunity is often the turnaround — and the biggest risk is whether the recovery actually happens. Sadbhav Engineering operates in road construction, highways and infrastructure development, with exposure to EPC projects and hybrid annuity model (HAM) assets. The company has been working through financial stress and restructuring its debt. Its future depends on restoring core operations, monetising assets and improving execution. Q2 FY27 consolidated performance: Revenue: ₹226.67 crore, down 9.3% YoY. Operating profit: ₹158.41 crore, up 7.5% YoY. Net profit: ₹63.87 crore, compared with ₹26.86 crore a year ago. However, the reported profit needs careful interpretation. Other income contributed significantly, while revenue from operations remains under pressure. What could drive a recovery? Debt restructuring: The lender-approved restructuring plan provides a framework to address existing borrowings. Asset monetisation: Realisation of investments, receivables and arbitration claims could support liquidity. Infrastructure demand: India's continued road and highway development provides a potential business opportunity. Operational revival: Restarting core construction activities could improve revenue visibility. The turnaround flywheel: Debt resolution → Asset monetisation → Liquidity improvement → Project execution → Revenue recovery. But the warning signs are serious. The statutory auditor has highlighted material uncertainty regarding the company's ability to continue as a going concern. The auditor also issued a qualified conclusion concerning contract assets of approximately ₹350 crore. More importantly, the statutory auditor resigned effective November 4, 2026, citing a significant reduction in operational activities.