Sanghvi Movers provides cranes on a hiring basis to various industries like oil and gas, steel, refinery, cement, automobile, chemicals, wind mill, and power sectors. It undertakes turnkey projects, which includes providing equipment, technical services, and skilled manpower. Its clients include ONGC, Reliance, L&T, NFC,BHEL, IOCL, TISCO, ACC, Gujarat Ambuja, Hyundai, Ispat, Indogulf Fertilisers, Balco, Skanska Construction, Suzlon Energy, Delhi Metro, and Petron Engineering.
Investment Theme Sanghvi Movers is a good play on India's increasing industrial and infrastructure capex. Sanghvi Movers' largest clients are in the wind mills, refineries and petrochemicals, and power sectors. Research indicates that the market opportunity for hiring cranes in its client sectors is likely to be more than INR 28 bn, of which, Sanghvi Movers is likely to corner a lion's share because of its established market position. Recent orders include:
1. Name of the Client : Suzlon Energy (Wind Power)
Value of Order : Rs 45.00 crores
2. Name of the Client : BHEL (Power Project)
Value of Order : Rs 24.00 crores
3. Name of the Client : Hajee A P Bawa (Cement Ind.)
Value of Order : Rs 11.25 crores
4. Name of the Client : Metro Tunneling Group(Delhi Metro)
Value of Order : Rs 5.25 crores
5. Name of the Client : Toyo Engineering (Refinery)
Value of Order : Rs 2.00 crores.
Financial Summary-Rs. Mn | ||||||||
Year to March | Q2FY08 | Q2FY07 | Y-o-Y% | Q1FY08 | Q-o-Q% | FY07 | FY08E | FY09E |
Net sales | 573 | 473 | 20.9 | 530 | 8.1 | 1,798 | 2,300 | 2,750 |
Employee expenses | 19 | 17 | 14.8 | 18 | 3.9 | 63 | 82 | 107 |
Operating & other expenditure | 28 | 24 | 19.4 | 23 | 23.9 | 434 | 589 | 751 |
EBITDA | 429 | 343 | 25 | 406 | 5.7 | 1,301 | 1,629 | 1,892 |
Depreciation | 114 | 85 | 34.3 | 111 | 2.2 | 347 | 535 | 589 |
EBIT | 326 | 198 | 64.6 | 295 | 10.5 | 954 | 1,094 | 1,303 |
Other income | 11 | 2 | 620.8 | 1 | 1,669.40 | 15 | 15 | 15 |
Interest (Net) | 75 | 62 | 21.1 | 74 | 1.5 | 245 | 299 | 344 |
PBT | 251 | 198 | 26.8 | 222 | 13.4 | 724 | 810 | 974 |
Taxes | 84 | 67 | 24.9 | 77 | 9.8 | 252 | 273 | 374 |
PAT | 168 | 131 | 27.8 | 145 | 15.4 | 472 | 537 | 600 |
EBITDA margins (%) | 74.9 | 72.5 | 76.6 | 72.4 | 70.8% | 68.8% | ||
NPM (%) | 28.7 | 27.6 | 27.4 | 26.2 | 23.3% | 21.8% |
Key Risks Sanghvi Movers derives ~55% of its revenues from the wind power sector. Hence,any slowdown in this user industry may drastically affect the company's performance and its business prospects.
Chanakya's Master Stroke
The company will grow faster in the future, driven by expansion, higher demand from user industries and pricing power. Considering that most of its fleet is booked for the next 18-24 month, Sanghvi is expanding its fleet size and investing about Rs 200 crore (Rs 2 billion) a year in FY08 and FY09.
Valuation | |||
FY05 | FY06 | FY07 | |
EPS (INR) | 3.4 | 7.9 | 15.7 |
Y-o-Y growth (%) | 122 | 134.8 | 46.6 |
P/E (x) | 58.4 | 24.9 |
However, the market has already discounted the scrip. See the technical chart below - The right time to enter the scrip was sometime around Oct 20'07 when the indicators turned bullish. If you want to enter the scrip, better wait for some time. The range of 175 - 225 will be the right band to accumulate this scrip.
Source:The Stock Editor
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