Buy Sanghvi Movers; target Rs 222: Anand Rathi

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Anand Rathi Securities has recommended a buy rating on Sanghvi Movers , with price target of Rs 222, in its report dated November 10, 2009.

"Earnings fell 25% yoy to Rs215m, on a 122-bp contraction in the EBITDA margin and a 14% rise in depreciation. The earnings drop was magnified by the high base in 2QFY09, when the company reported its best-ever quarterly performance. The company plans to spend Rs1.6bn as capex in FY10, which is significantly higher than our earlier estimate of Rs230m. The higher capex demonstrates Sanghvi's confidence in regard to the economic recovery. We reduce our earnings estimates, by 23% and 20%, for FY10 and FY11, respectively, on lower capacity utilization and higher interest cost. We set our target price to Rs222 which is 9x our FY11 estimated EPS. We maintain our Buy rating." says Anand Rathi Securities report.

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